Characteristics of Markets

Question 1

What is a Market?

Answer 1

A market is place where buyers and sellers can meet to exchange and trade goods and services.

Question 2

What are the key features of a Market?

Answer 2

1. Buyers (to create demand)
2. Sellers (to meet demand)
3. A good, service or commodity to be bought and sold
4. The price of the commodity
5. Markets must be voluntary, therefore, people can choose whether to participate or not
6. A meeting arrangement for the trade to occur

Question 3

What are the 6 features of market economies?

Answer 3

1. Property rights and private ownership
2. Economic freedom
3. Self-interest
4. Competition
5. Moral Hazard
6. Limited role of the goverment

Question 4

What is Property rights and private ownership?

Answer 4

Through contract law and the justice system, private firms have ownership or property rights over resources and goods. In turn, this means that owners are free to sell their property rights to the highest bidder.

Question 5

What is Economic Freedom?

Answer 5

Markets have a voluntary exchange. Both buyers and sellers are free to participate in the economy if they choose to do so. In this way, producers can sell what they wish to and consumers can purchase commodities as they need or want them.