Category: Economics

Markets

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Market

Market is a social structure where:

1. Existence of a commodity (products or services)
2. Existence of buyers and sellers
3. One price for the same product of the same quality.

Size of Market:

Size of market depends upon the following:

1. Nature of demand:

If the demand of a product is higher its market will be vast or large and vice versa.

2. Nature of Commodity:

If the commodity is perishable its market is limited, and if it’s non-perishable then it has a wide market.

3. Means of Transportation & Communication:

If the means of transportation and communication are well developed in an area or country then the market for the products will be wide, if the goods can transfer from once place to other easily, else the market will be limited.

4. Peace and Security:

If the state has peace and security, then the market expand to the whole area or region but if there are some problems regarding peace or security, the goods will not be distributed to the areas.

5. Currency & Credit system:

If the currency and credit system is strong then more transactions will take place and so the wider will be market and vice versa.

6. Weight & Value:

If the goods are heavy weighted then their market will be limited as these kind of commodities are difficult to move from one place to another but on the other hand if goods carry small weight but high value then their market will be wider.

Classification of Market

Markets are classified as:

1. Area:

– Local Markets: markets within a city or town
– Regional Markets: markets within few cities or a region.
– National Markets: markets within the country premises.
– International Markets: markets in few or more countries.
– Global Markets: markets in all over the world.

2. Time Period:

– Day to Day Market: markets for perishable goods like fruits and vegetables
– Short Period Market: short term market, the supply isn’t in control
– Long Period Market: non-perishable goods, supply is in control.

3. Nature of Commodities:

– General Market: for all sort of products
– Specialized Market: for a specific product or group of products
– Grading Market: grading system by sellers
– Sample Market: where samples of the products are displayed or available.

4. Perfect and Imperfect Markets:

– Perfect Market:
Large no. of sellers and few buyers, products are homogenous, same price prevails, competition among sellers

– Imperfect Market:
Limited no. of sellers and large no. of buyers, products are heterogeneous, there is price difference and monopoly so the entry barriers for new sellers.

Introduction to Economics

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Economics

The term economics comes from the Greek for oikos (house) and nomos (custom or law); hence (rules of the house hold).

Different school of thoughts and their definitions

1. Adam Smith: (classical approach)
“Economics is the science of wealth.”

2. Alfred Marshall: (neo-classical approach)
“Economics is study of Material welfare.”

3. Robbins: (modern approach)
“Economics is a science in which we study human relations between ends and scarce resources.”

The modern approach is:

“Economics studies the allocation of scarce resources among people.”
“Economics is the social science that studies the production, distribution, and consumption of goods and services.”

Common Terms:

1. Inputs:
Inputs are products, services, or information needed from suppliers to make a processed work. Generally we call Inputs as Raw Materials.

2. Outputs:
Products, services, or information generated or processed from inputs are called outputs.

3. Factors of Production:
The four factors which process the inputs and generate outputs are called FOPs or Factors of Production. These are 1.Land 2.Labor 3.Capital 4.Entrepreneur.

4. Efficiency:
Efficiency is to get maximum output with minimum input or resources.

5. Effectiveness:
Completion of tasks within due date is effectiveness.

6. Trade off:
If you want to get something, you have to loose something, this is trade off.

7. Opportunity Cost:
The cost of the best forgone alternative is opportunity cost.