Lesson 1, Topic 1
In Progress

What is Market?

Lakshmi Datti December 23, 2021

Markets Traditionally, a “market” was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class. Five important markets are interconnected, as shown in Figure.

Structure of Flows in a Modern Exchange Economy

Manufacturers buy resources (raw material, labor, capital) from resource markets, turn them into goods and services, and sell finished products to intermediaries, who sell them to consumers. Consumers sell their labor in the resources market and receive money. The government collects tax revenues to buy goods from the resource, manufacturer, and intermediary markets and uses these goods and services to provide public services. These interacting sets of needs are linked through exchange processes.