An Introduction to Business

“THE MARKET”
Lesson Objectives…

l Explain what the market is and give

examples
l Explain why market price is relevant to a
business
l Define demand and represent the
demand curve graphically
l Identify the factors that effect demand for
different products
What is a Market?

DEFINITION – any situation where buyers and

sellers are in contact in order to establish a price.
•Formal – shop or financial market such as the Stock Exchange
•Informal – car boot sale, selling goods from a street corner or
an advert in a local newspaper
•In any market, price is something that affects all the
businesses trading in it.
Why is market price relevant to a
business?
l All businesses have competitors - No firm can
charge a price that is too far out of line with the market
price for the sort of product that it is selling.
I-Phone £700 Blackberry £250 Asus £30

l Market price affects a business’s mark up –

basically profit.
l Market price rises – mark up rises
l Market price falls – mark up falls
How is market price determined?

“Market Forces”

DEMAND
&
SUPPLY
Demand
DEFINITION – the quantity that people in a particular
market actually can and will purchase at each price

l Market price is low – more people will purchase the

product

l Market price is high – fewer people will purchase the

product
Demand for Coca Cola
Bury Colleges’ canteen sells cans of Coca Cola.
Would you purchase Coca Cola from the canteen
if it cost :
Price (£) Quantity Demanded
0.30
1
5

TASK – represent this information graphically in your worksheet

(Quantity is always put on the x-axis and price on the y-axis)
Demand Curve for Coca Cola
Products I bought at the weekend

Shoes from Primark

Free Range Eggs

Present for mum

THINGS I
BOUGHT OVER
THE WEEKEND

Bicycle Special offer pizza

Fashion Dress
Why did I demand shoes from
Primark?

l Low price
l Lower price than other similar shoes
l Fashionable
l I am a student – low income
Factors that Determine Demand
l Price
l Income
l Wealth
l Advertising, Promotional offers and Public
Relations
l Taste and Fashion
l Demographic Changes
l Government Action
l The Price of other Goods
Factors that Affect Demand

TASK – What
would make
customers buy
MORE of
these goods?