A market exists in any situation where buyers and sellers come together to exchange goods and services. A market can exist in a physical location, it can spread across a number of locations, or can have no physical location at all.
Retail markets
Retail markets allow us to buy most of our goods and services. These include:
- Shopping areas in the Central Business Districts (CBDs)
- Huge suburban shopping malls: such as Westfield centres in Parramatta and Chatswood
- Local shopping centres with a supermarket and a number of specialty stores
- Shopping strips located along major roads and near public transport hubs
- Online shopping websites, such as Amazon
Labour market
- Labour market is the buying and selling of labour.
- Workers sell their skills, knowledge and effort to employers.
- In return for their labour, the employer will pay the workers a wage.
Labour market does not operate in a particular physical location. It relies on a variety of means of communication between the sellers of labour (potential employees) and the buyers of labour (employers):
Financial market
- Financial markets are the intermediaries between the savers and the borrowers in an economy.
- The price of having access to money that belongs to someone is known as interest.
Stock market
- The stock market (or share market) is where shares in Australian companies are bought and sold.
- A share is a unit of ownership in a company.
- Businesses can raise money for investment by selling shares in their companies, and individuals or other businesses can invest their savings by buying shares in companies.
Government intervention
- A market can allocate resources in an efficient manner.
- This is because the owners of those resources are always seeking to maximise their Profits and incomes.
- However, at times the profit seeking nature of businesses can result in negative outcomes for the society and the environment.
- Governments may need to intervene in the market to reduce these problems.
Reason 1
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Environmental degradation is the deterioration of the natural environment and is caused by things such as pollution and habitat destruction.
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Humans rely on the environment for many things, including food, water, and production of goods and services.
Reason 2
- Resources need to be conserved so that future generations are not restricted from using them.
- The challenge faced by governments is the trade-off between the short-term exploitation of natural resources for economic gain and the long-term needs of both society and the economy.
- For long term growth, the environment needs to be sustainably managed.
Other reasons
- Stabilise prices
- Provide producers and farmers with a minimum Income
- To avoid excessive prices for goods with important social welfare.
- Discourage demerit goods (harmful, unhealthy to the individual consumer)
Examples of demerit goods are: Alcohol, cigarettes, drugs, junk food, and gambling-related items.