Business: Types Of Markets

Question 1

A market

Answer 1

A place where buyers and sellers exchange goods and services.
It is where all transactions take place.
Markets are not confined to a specific place.

Question 2

There are two types of markets:

Answer 2

• Goods and services market; and
• Factor market.

Question 3

The goods and services market

Answer 3

All economic transactions where goods and services are exchanged take place in this market.
Households use their income to buy goods and services from businesses or the government on the goods and services market.
The goods and services are finished products that businesses have produced using the 4 factors of production.

Question 4

The factor market

Answer 4

This is where businesses or the government buy and sell the services of the factors of production (productive resources).
1. A business buys its workers’ ability to work (labour) and pay them salaries or wages.
2. A business borrows money from its owner or financial institutions at an interest rate.
3. A business buys and sells an entrepreneur’s ideas for a profit.
4. A business buys the ability to use land as their business premises and pays the monthly rent.