Definition
Per (Gans et al.) a market is when you have a group of buyers and sellers interacting to trade a good or service. Every trade needs at least two parties: a buyer and a seller.
Why It Matters
Markets help sellers find buyers, and buyers find sellers for goods and services.
Example
Markets can be physical, like a retail store, or virtual, like the stock market or Amazon.
Limitation
A limitation of markets, called a market failure, are negative externalities whereby one’s consumption or an entities production of a good or service has adverse affects on third party(ies). An example is pollution caused by the production of iPhones, or someone not being vaccinated. (Investopedia)
Further
There is a difference between a market and a competitive market.
There is a price for a good or service, and that is determined by supply and demand.
Work cited:
Gans, Joshua, et al. Principles of Microeconomics. South Melbourne, Victoria, Australia, Cengage Learning Australia, 2021.
Kenton, Will. “Market: What It Means in Economics, Types and Common Features.” Investopedia, 28 July 2024, www.investopedia.com/terms/m/market.asp.
Investopedia. “Market Failure.” Investopedia, 7 Apr. 2024, www.investopedia.com/terms/m/marketfailure.asp.
