A market is any place or arrangement where buyers and sellers exchange goods or services.
A market is where buyers and sellers come together to exchange goods and services. It does not need to be a physical place. A wet market is a market, but so is an online shopping platform or the global market for crude oil.
Buyers, also called consumers, want to get what they need at the lowest price. They show what they want by what they are willing and able to pay for.
Sellers, also called producers or firms, want to earn revenue and profit. They decide what to offer and at what price. When buyers and sellers agree on a price, a trade happens.
Some markets are for products, such as phones and haircuts. Others are for factors of production. In the labour market, for example, workers sell their time.
- Market
- Any arrangement where buyers and sellers exchange goods or services.
- Buyers
- Consumers who want goods at low prices.
- Sellers
- Producers or firms who want revenue and profit.
Worked example: Spotting markets in everyday life
Each example has buyers, sellers and a price, even when nobody meets face to face.
- Product market: shoppers buy groceries from a supermarket chain.
- Online market: buyers bid for second-hand bicycles on a resale app.
- Labour market: a hotel hires housekeepers, who sell their labour for a wage.
- Global market: airlines across the world buy jet fuel from oil companies.
Watch out for this
A market has to be a physical place like a shopping centre.
A market is any arrangement that lets buyers and sellers trade. Online platforms and phone orders are markets too.
Check your understanding
Which of these is a market in the economic sense?
- A website where people buy and sell used textbooks
- A list of all the textbooks a school uses
- A warehouse where textbooks are stored