Introduction to Markets 1 st Economic’s Lesson!!

2 Is Economics a dry subject? The truth is that economics touches in some way upon just about everything important that happens in our world. For example, the level of interest rates has a major impact on everything from company profits to housing affordability - so it is worth an investor's while to have an understanding of what's going on at a wider level.

3 A-Level Economics What you'll find in our A-Level is "the big picture" - lessons on interest rates, politics, global markets, employment statistics, environmental issues, standards and living and lots more. It is of course impossible to know the future - but you can at least get a better idea of which path the world is heading down.

Economics Markets Your first set of theory to learn

5 Introduction to Markets Market – any place or process that brings together buyers and sellers with a view to agreeing a price The basis of how an economy operates – through production and subsequent exchange

6 TASK… On whiteboards – write a list of 5 ‘market’ places that you can think of. Now share your list with two other people. What ‘markets’ do you agree on? What ‘markets’ are you unsure of? Be prepared to feedback ideas….

7 Different types of markets –Organised markets – commodities e.g. rubber, oil, sugar, wheat, gold, copper, etc. –Financial markets – stocks, shares, currencies, financial instruments –Goods markets – the supply and demand of goods and services in general, food, clothing, leisure, houses, cars, etc. –Factor markets – the supply and demand of factors of production – land, labour and capital

8 Introduction to Markets A market does NOT have to be a physical place – like a shop! The market place consists of all those who have items/services for sale and all those who are interested in buying those items/services Many businesses have global markets because of the developments in technology – see or

9 Introduction to Markets Demand – the amount consumers desire to purchase at various alternative prices Demand – reflects the degree of value consumers place on items – price and satisfaction gained from purchase (utility) Supply – the amount producers are willing to offer for sale at various prices Supply – reflects the cost of the resources used in production and the returns/profits required

10 Factors affecting the efficiency of markets –The amount of information about the markets held by consumers and producers –The ease with which factors of production can put to alternative uses –The extent to which price is an accurate signal of the true utility and true cost in determining the level of demand and supply (externalities)

11 More factors affecting the efficiency of markets –The degree to which firms hold monopoly power –The degree to which property rights are clearly defined –Whether the market can provide goods and services (public goods)

12 Is gold's the best bet?

13 FTSE 100 – is this a good place to invest?

14 Stock Markets

15 Commodities – US data What would you invest in?

16 FT Commodities – UK

17 Interpreting data – Sterling V Dollar How strong / weak is the £ to the $?

18 Cash Market - Gilts

19 Burgernomics! The Big Mac Index