MGTA01H3 Chapter Notes - Chapter 4: Target Market, Perfect Competition, Natural Monopoly
●Market
○The interaction of buyers and sellers, exchanging information about goods and
services for sale
○Notion is an abstract idea, rather than a physical place
●How prices are set in a market
○In a market, prices are set by buyers and sellers, negotiating. Sellers, hoping to
maximise the revenue they get ,will charge as much as they reasonably can.
Shoppers will attempt to pay as little as they can. Price setting happens in markets
every time a buyer meets a seller
●Elements necessary to understand a market, and how it functions
○A would-be customer, in search of a product or service, searches for one or more
vendors
○A vendor, in search of a sale, tries to highlight the features and benefits of his
product
○Information is exchanged between consumer and vendor
○Prices are negotiated
○A sale is completed or not
●Market prices are set by hundreds of buyers and sellers making thousands of transactions
every minute of every day
●Advantages of the market system
○Entrepreneurs are permitted and encouraged to start a business
○Consumers are able to have some choice
○Sellers are entitled to seek a profit
○When buyers and sellers agree, both parties get what they want
●Target market
○A particular group of people who share a number of similarities (for example:
age, gender, income, location) and who have similar needs and wants and are
identified by the seller as being most likely to buy a business' products
○A business must dedicate much thought and effort to determining “who is our
target market?”
●Degrees of Competition
○The various combinations of numbers of buyers and sellers, in a market
○The 3 simplest cases of competition
■A market with very many sellers
■A market with only a small number of sellers
■A market with only one seller
●Perfect competition
○A market characterised by a large number of small sellers. All sellers offer more-
or-less the same product, for more-or-less the same price, and buyers have lots of
choice
●Market share
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MGTA01H3 Full Course Notes
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Document Summary
The interaction of buyers and sellers, exchanging information about goods and services for sale. Notion is an abstract idea, rather than a physical place. How prices are set in a market. In a market, prices are set by buyers and sellers, negotiating. Sellers, hoping to maximise the revenue they get ,will charge as much as they reasonably can. Shoppers will attempt to pay as little as they can. Price setting happens in markets every time a buyer meets a seller. Elements necessary to understand a market, and how it functions. A would-be customer, in search of a product or service, searches for one or more vendors. A vendor, in search of a sale, tries to highlight the features and benefits of his product. Information is exchanged between consumer and vendor. Market prices are set by hundreds of buyers and sellers making thousands of transactions every minute of every day. Entrepreneurs are permitted and encouraged to start a business.
