Markets and Government in Modern Economy : Review 1
This will be the Review # 1 for the topic : Markets and Government in Modern Economy.
What will be the learning objectives ?
After reading this post, you will be able to:
- Define market and its importance to the government and society.
- Understand the market system and enumerate the different types of market.
- Discuss the elements of economics and the types of goods.
The forces of supply and demand need a mechanism that will facilitate exchanges between them. The mechanism, which is called the market, is crucial in affecting transactions between the buyers, who makes the demand and the sellers, who produced the products or commodities.
When buyers wish to exchange money for a good or service are in contact with sellers wishing to exchange goods and services for money, a market exists.
As we have seen, factor-owner sell factor-units to the business firms. The business firms turn out finished goods and services which they sell to other units in the system to the factor owner themselves, to household or consumer units, to the government, and to all others who may want to buy such goods and services as are put out by the firms. In this system sellers are also invariably buyers. The economic picture also represents a series of market relationships.
The term market in economics refers to a situation wherein there are buyers and sellers sufficiently in communication with each other that exchange takes place among them. To have a market, it is not necessary that buyers and sellers meet at a certain place. They may communicate by correspondence, phone or cable. It is enough that hey are sufficiently takes place between or among them.
Markets can be classified in various ways. For instance, we may classify markets of what is being sold and bought. The market that's usually known to the man in the street is the market for finished goods or commodities. But other kinds of markets also exist. Where factors of production are being sold and bought, the market is known as a factor market.
If we pursue this further, we can speak of a labor market, a capital market or a land market. In international trade, one may have to go to the foreign exchange market to sell or buy the foreign currency necessary to finance international transactions.
Households - this simply refers to the consuming unit of the economy.
Firms - this refers to the producing unit of the economy.
Product Market - this pertains to a place where all final goods are available for sale.
Factor Market - this refers to a place where inputs of production are being sold.
The continuation of this review will be posted by tomorrow, hoping that you have learn something. This review is just too basic but it can give you lots of lessons and learnings.
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