The term 'market' , as used by economist, is an extension of the ancient idea of a market as a place where people gather to buy and sell goods. In former days part of a town was kept as the market or marketplace, and people would travel many kilometres on special market-days in order to buy and sell various commodities. Today, however, market such as the world sugar market, the gold market and the cotton market do not need to have any fixed geographical location. Such a market is simply a set of conditions permitting buyers and sellers to work together.
In a free market, compettion takes place among seller of the same commodity, and among those who wish to buy that commodity. Such competition influences the price prevailing in the market. Prices inevitably fluctuate, and such fluctuations are also affected by current supply and demand.
Whenever people who are willing to sell a commodity contact people who are willing to buy it, a market for that commodity is created. Buyers and sellers may meet in person, or they may comunicate in some other way : by letter, by telephone or through their agents. In a perfect market, communications are easy, buyers and sellers are numerous and competition is completely free. In a perfect market there can be only one price for any given commodlty : the lowest price which sellers will accept and the highest which consumers will pay. There are, however, no really perfect, and each commodity market is subject to special conditions. It can be said however that the price ruling in a market indicates the point where supply and demand meet.
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