Introduction
I will be discussing and explain to my grade11 class about the dynamics of markets.
markets can be found anywhere buyers and sellers get to exchange goods and services for money. This includes newspapers, advertisement, the internet and any other way buyers and sellers use to make contacts with one another.
Task
1.Name TWO types of markets. (4)
2.List any THREE factors that determine the demand for goods. (6)
Process
The market as a phenominon
The types of markets
THE MARKET AS A PHENOMINON
A market must have
●● Sellers (suppliers) who have goods or services that they want to sell.
●● Buyers (consumers) who want to buy these goods or services; they demand these
goods or services.
●● A place where the buyers and the sellers meet.
Characteristics and activities of markets
●● The sellers compete with one another.
●● The buyers also compete to get the best price
●● Negotiation (bargaining) takes place.
●● An exchange of goods or services between the buyer and the seller at the agreed
upon price takes place.
Value, Price and Utility
Price
The quantity of goods that producers are willing to supply/sell at a given price.
Value
Is the ability that goods or services have to demand other goods (including money) or services in exchange. Value in use means that something is needed and it has value such as sunlight or fresh air. A product has value in exchange when people are willing to pay for it, for example, a car or electricity. The ‘value in exchange’ of a product is the price of the product.
Utility
●● Utility is the degree of satisfaction that a consumer gets from a product or service.
●● A product or service that has utility meets customers’ needs.
●● The more utility goods or services have, the greater the demand will be for those
products or services.
Marginal utility: the extra satisfaction a consumer gets by purchasing one more unit of a product.
Diminishing marginal utility: the more units one buys, the less additional satisfaction one gets from buying each
●● The more satisfaction a product gives, the more utility it has.
●● If a commodity has utility and is scarce, people will pay money for it. The
commodity therefore has a price.
●● The price of a commodity is its exchange value.
●● People usually exchange goods and services for money.
THE TYPES OF MARKETS
Consumer market
●● A consumer market (also called a commodity market) is a market for goods or services
●● A consumer market is where you buy finished products. Factor market
●● A factor market is where you buy production factors
●● Production factors such items such as labour or natural resources.
Characteristics of perfect markets
●● There are a large number of buyers and sellers.
●● The buyers and sellers have full information about the market.
●● Buyers and sellers are free to enter or leave the market.
●● All the goods or services on the market are identical.
●● No government interference with buyers or sellers.
●● No collusion (working together to influence prices) between sellers.
●● Neither the buyers nor the sellers can influence the price of the goods or service.
Imperfect markets
Conditions for a perfect market do not really exist, so all markets are imperfect to a greater or lesser degree.
●● Sellers or buyers can influence the price of a product.
●● Some sellers can drop their prices and so force other sellers out of the market.
●● Producers can reduce the quantity of a product that they make and so cause the
price of the product to increase.
●● The goods or services on the market are not identical.
●● Buyers and sellers are not free to enter or leave the market.
There are three types of imperfect markets
●● A monopoly – where there is only one seller of a good or service, and consumers have no substitute for the good or service. The seller can ask any price and offer goods of any quality. For example, Eskom is the only producer of electricity in South Africa.
●● An oligopoly –where there are a few large firms who dominate the market. For example, Vodacom, MTN and Cell-C dominate the mobile phone service market in South Africa.
●● A monopolistic competing market –certain features of a monopoly and
competition are combined. Telkom for many years had a monopoly on providing telecommunication services by landline. Telkom therefore could ask as much as they liked for their service. However, if they became too expensive, people would switch to using their cell phones and Telkom would lose business.
World markets
These are markets that operate world-wide and are not limited by national boundaries. Internet, telephone networks and facilities for electronic money transfers make more markets world markets.
Evaluation
This memorandum serves as a guide to mark the task for this activity
1.
- consumer market
- Factor market
2.
- Weather.
- New or better alternative products come onto the market.
- Technological changes.
Conclusion
Learners should be informed broadly on the different kinds of market the get their goods and services from. Knowledge based on the demand and how prices are formed for each and every good they consume in their daily lives.
Credits
All credits goes to
Via Afrika Economics
Grade 11
C. Chaplin
MacMillan