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MARKETS AND MARKET STRUCTURES

In an ancient time a market was a place where people gather to buy and sell goods. Today, however, the term "marker" has a much broader sense. A market is a set of arrangements by which buyers and sellers are in contact to exchange goods and services. So, market is the institution through which buyers and sellers interact and engage in exchange.

The Interactions between buyers and sellers in some markets may be very simple. Street markets, fruit stalls and shops physically bring together buyers and sellers. Today suppliers and demanders interact through more complex markets. The Stock Exchange, for example, operates chiefly through intermediaries (stockbrokers) who transact business on behalf of their clients.

Markets may be national and local in scope. Markets for many manufactured goods (automobile, electronics, grain, gold, oil. etc.) are international or global. There are also markets for the factors of production - land, labour, capital. In the labour market employers deal with employers, exchanging labour for a certain wage.

All the markets determine prices that ensure that the quantity people wish to buy equals the quantity people wish to sell. Price and quantity cannot be considered separately.

A market exists whenever and wherever one or more buyers and sellers can negotiate for goods and services and as a result participate in determining their prices. To see how file market works in practice we must concentrate on its features: demand, that is the behavior of buyers, and supply, that describes the behavior of sellers.

Economists classify markets according to conditions that prevail in them. They determine market structure, or the nature and degree of competition among firms operating in the same market. Market structure is defined by how many firms there are in the market, whether products are differentiated or are exactly the same, whether or not competing firms can enter and leave the market freely.

Economists have names for these different market structures. They are Pure Competition, Monopolistic Competition, Monopoly and Oligopoly.

Pure Competition is a market situation in which there are many independent and well-informed buyers and sellers of exactly the same economic products.

Monopolistic Competition is a market in which many firms sell similar but not identical products. Thus, product differentiation separates Monopolistic Competition from Pure Competition.

Monopoly is a market situation in which there is only one seller.

Oligopoly is a market dominated by a few large firms.

ANSWER THE FOLLOWING QUESTIONS:

FACTORS OF PRODUCTION

The productive resources exist In all types, shapes end sizes, and all are limited. The resources used in production of goods and services are also called the factors of production. They are land, labour and capital. These resources provide the energy and materials that make production possible. Production is a fundamental factor in our life.

Land means natural resources not created by human efforts: Natural resources are the things provided by nature that go into the creation of goods and services. Natural resources include fertile soil, minerals, water, climate and forests. Land has little or no utility unless it is worked upon by man.

Labour is essential factor of production. Labour means human resources or people with all their efforts and abilities. Human resources labour, skills and knowledge - are an important part of production.

In economic theory "labour" is any work undertaken in return for a fixed payment, i.e. the price for the use of labour. Most occupation have wage-rate - a standard amount of pay given for work performed. Money is a means of measuring the value of men's labour.

In order for any country to grow, it must have a large and skilled labour force. Labour force is the number of people employed plus all those who are unemployed and for different reasons they do not want to look for a job. So, "national labour force” is all those people who are available for work within the nation that is the working population. Since the size of labour force is related to total population, the number of people available for productive activity varies as the population changes. Many factors such as Immigration, famine, war, disease can influence on both the quantity and quality of labour. So, labour is a productive resource that may vary in size over time.

Labour can be mental and physical; But in many tasks it is necessary to combine mental activity with physical efforts.

There are four major categories of labour that are based on the general level of skills needed to do any kind of Job. These categories are unskilled, semiskilled, skilled and professional or managerial.

Workers who do not have the training to operate machines and equipment fall into the category of unskilled labour. Most of these people work chiefly with their hands at such jobs as digging ditches, picking fruit, etc.

Workers who have mechanical abilities to operate any not very complex equipment fall into the category of semiskilled labour. They may operate electronic floor polishers or any other equipment that calls for certain amount of skill.

Workers who are able to operate complex equipment and can do their teaks with little supervision fall into the category of skilled labour. Examples are carpenters, typists, tool makers.

Workers with high level skills fall into the category of professional labour. Examples are doctors, lawyers and executives of large companies.

Capital means man-made resources. Capital includes those things that are used in production of goods and services. Capital may be physical and financial.

Physical capital are things that have already been produced and then are used in production of other goods and services. Physical capital includes such things as buildings, equipment, machinery, roads, etc. Financial capital refers to money that business people use to buy buildings, machinery, tools and other productive resources used in the process of creating goods and services.

When three factors of production - land, labour and capital - are present, production takes place and commodities are produced.

The forth factor of production is entrepreneurship. The entrepreneurs bring together the other three factors of production.