L esson 4:

Markets

What is a market? together by means of modern

telecommunications the buyers and
To develop the mechanics of
sellers of corporate stock. Sothebys
supply and demand, we must narrow
auction in London brings together
our vision to study of how a single
the sellers and buyers or rare works
market works. In each market,
of art. The Rotterdam oil market
buyers and sellers are guided by the
brings together buyers and sellers of
price system in their buying and
crude oil not under long-term
selling decisions.
contracts. The university placement
Types of markets office brings university graduates
A retail store, a gas station, a together with potential employers.
farmer’s market, real estate firms, The gas station brings together the
the New York Stock Exchange buyers and sellers of gasoline. In
(where stocks are bought and sold), some markets, the buyers and sellers
Chicago commodity markets (where confront each other face-to-face
livestock, grains, and metals are (roadside farm markets). In other
traded), auctions of works of art, markets, the buyer never sees the
gold markets in London, Frankfort, seller (the Chicago commodity
and Zurich, labour exchanges, markets).
university placement offices, and Determinants of the Form of the
hundreds of other specialized Market
arrangements are all markets.
The actual form a particular
Markets are arrangements for market takes depends of the type of
bringing together buyers and sellers good or service being sold and the
of a particular good or service. The costs of transporting the good from
New York Stock Exchange brings the point of production to the point
of sale. Some markets are local called a perfect (or perfectly
(bringing together local buyers and competitive) market.
sellers); others are national (bringing
The principal characteristic of
together the buyers and sellers in all
a perfectly competitive market is
parts of the nation), others are
that buyers and sellers face so much
international (bringing together the
competition that no person or group
buyers and sellers in all parts of the
has any control over the price.
world). Real estate is traded in local
markets; houses and buildings cannot The markets where most
be shipped from one place to another people buy and sell goods are not
(except at great expense). College perfect. Buyers and sellers may not
textbooks are usually exchanged in a be perfectly informed about prices
national market. The New York Stock and qualities. Two homemakers pay
Exchange, the various gold different prices in adjacent grocery
exchanges, and the Chicago stores for the same national brand of
commodity exchange are markets in cookies. Houses that are virtually
which buyers and sellers from around identical sell at different prices.
the world participate. Italy and West Germany pay
different prices for the same grade
The study of marketing
of imported crude oil. Two
arrangement is a subject area in
secretaries with the same
which economics and business
qualifications, responsibilities, and
administration overlap. Both
disposition in the same company earn
disciplines presume the markets
different wages. General Motors and
develop in an orderly fashion and
Saudi Arabia exercise some control
teach that the market form that
over the prices they charge. Large
eventually evolves may be the one
buyers exercise some control over
that keeps the cost of delivery (or
the prices they pay.
marketing cost) to a minimum.
Many products, however, are
Perfect markets
exchanged in perfect markets.
The real world consists of an Stocks, bonds, and commodities such
almost infinite variety of markets. as wheat, silver, copper, gold, foreign
We are going to focus our attention currencies, soybeans, lumber, cotton,
on a very special type of market, orange juice, cattle, cocoa, and
platinum are bought and sold in function in a way that approximates
perfect markets. Private investors, perfect markets. In this respect, the
mutual funds, commercial banks, behaviour of perfect markets serves
industrial buyers of commodities, as a useful guide to the way many
and agricultural brokers participate real-world markets function. The
in these markets. Although markets perfect market is a valuable starting
like the local grocery store, the gas point for examining economic
station, or the college placement behaviour.
office are not perfect, many of them

I. Answer the following questions:

1. What does the concept of market mean?

Markets are arrangements for bringing together buyers and sellers of a particular good
or service. (Another definition: market is a place where goods and services are exchanged.
Markets consist of buyers and sellers with facilities to communicate each other for
transactions of goods and services).
2. What are different forms of the market?
The different forms of the market are:

 Local markets;

 National markets;

 International markets.
3. Do buyers and sellers always meet each other in markets?
(No)/ In some markets, the buyers and sellers confront each other face-to-face. In other
markets, the buyer never sees the seller.
4. What do the terms ‘a local market’, ‘a national market’, ‘an international market’
mean?
 A local market: bringing together local buyers and sellers;
 A national market: bringing together the buyers and sellers in all parts of the nation);
 An international market: bringing together the buyers and sellers in all parts of the
world.
5. What are the principal characteristics of a perfect market?
 The principal characteristic of a perfectly competitive market is that buyers and sellers
face so much competition that no person or group has any control over the price.
6. What products are exchanged in perfect markets?
Many products are exchanged in perfect markets: stocks, bonds, and commodities such
as wheat, silver, copper, gold, foreign currencies, soybeans, lumber, cotton, orange juice,
cattle, cocoa, and platinum are bought and sold in perfect markets.
7. Who are the participants of a perfect market?
The participants of a perfect market are private investors, mutual funds, commercial
banks, industrial buyers of commodities, and agricultural brokers.

II. Read the statements and say whether they are true or false.

1. In each market, buyers and sellers are guided by the price system (true);
2. The university placement office brings university graduates together with sellers (false);
3. Sothebys auction in London brings together the buyers and sellers of gasoline (false);
4. The New York Stock Exchange is one of the markets in which buyers and sellers from
around the world participate (true);
5. One single seller can change the price (false).

III. Find equivalents:

1. Price A. a place where people buy and sell goods

2. Trade B. an article of trade
3. Market C. to put (money) to a particular use
4. Invest D. a person who buys
5. Buyer E. an amount of money for which a thing is sold
6. Commodity F. to buy and sell goods

IV. Fill in the blanks using the essential vocabulary.

1. What price did you pay for the house?

2. The fall in the value of the dinar may help to stimulate international trade;
3. Your bank manager will advise you how to invest your money;
4. The law forbids the commodity of alcohol to people under 18;
5. Britain built up her wealth by buyer other countries;
6. If the book is properly market, it should sell very well.
Terms translated into Arabic
Market ‫السوق‬
Supply and demand ‫العرض والطلب‬
Buyer and seller ‫المشتري والبائع‬
Price ‫السعر‬
Real estate firms ‫الشركات العقارية‬
Stock Exchange ‫البورصة‬
Commodity markets ‫سوق السلع األساسية‬
Livestock ‫الماشية‬
Auction ‫المزاد‬
Stocks ‫األسهم‬
Crude oil ‫النفط الخام‬
Determinants of the Form of the ‫محددات شكل السوق‬
Market
Perfect markets (perfectly competitive) ‫سوق المنافسة التامة‬
Wage ‫األجر‬
Stocks ‫األسهم‬
Bonds ‫السندات‬
Foreign currencies ‫العمالت األجنبية‬