Market: Types of Market

len Alfred Ajibola - Wed, 22nd January, 2020 @ 7:02 PM

Topics in Economics

Factors affecting population in economics Advantages of Inflation Disadvantages of Inflation Concept of Inflation in Economics Scheme of work for Economics, SS1, First Term Scheme of work for Economics, SS1, Second Term Scheme of Work for Economics, SS1, Third Term Functions of the Wholesaler Advantages and Disadvantages of the Wholesaler Wholesale Market: Who is a Wholesaler? Characteristics of the Wholesaler Retail Market: Who is a Retailer and Examples of Retailers Market: Types of Market Market - What is a Market in Economics? Elasticity of Supply: Types of Supply Elasticity Supply Elasticity: Elasticity of Supply explained Demand Schedule - Types of Demand Schedule Demand: What is Demand? Law of Demand Concept and Types of Cost Supply, Supply Curve and Law of Supply

Academic Questions in Economics

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A _____ market provides a platform whereby job seekers link up with employers in an attempt to be hired.

  • A. Wholesale market

  • B. Bond market

  • C. Physical market

  • D. Virtual market

  • E. Factor Market

  • F. Labor Market

Which of the following is not a type of market based on commodities bought and sold?

  • A. Wholesale market

  • B. Bond market

  • C. Physical market

  • D. Virtual market

  • E. Factor Market

  • F. Labor Market

According to economists, a market refers to a/an _____ comprising of various buyers and sellers carrying out business transactions.

  • A. Place

  • B. Location

  • C. Entire area

  • D. Online platform

  • E. Avenue

  • F. Axis

Primary market is a type of market based on _____.

  • A. Market structure

  • B. Demand

  • C. Supply

  • D. Commodities bought and sold

  • E. Channel of distribution

  • F. Internet and world wide web

Pice elasticity of supply - Len Academy

The above diagram on the quantity supplied against a change in price is _____.

  • A. Elastic

  • B. Inelastic

  • C. Perfectly Elastic

  • D. Perfectly Inelastic

  • E. Zero Elastic

  • F. Unitary Elastic

The rate at which an increase in the price of a product translate into the product's increased production and availability in the market is termed _____.

  • A. Demand

  • B. Supply

  • C. Demand Elasticity

  • D. Supply Elasticity

  • E. Demand Curve

  • F. Supply Curve

Concerning demand curve, which of the following statement is incorrect?

  • A. It is a graphical represention of a table showing the price of commodities and quantity demanded

  • B. It can be an individual demand curve

  • C. The x-axis shows the price of commodities

  • D. The price and quantity demanded are expressed on different axis of the graph

  • E. It can be a market demand curve

  • F. All the options are correct

A table that shows the price of a commodity and the quantity demanded is termed _____.

  • A. Price table

  • B. Demand table

  • C. Demanded-price table

  • D. Demand preference table

  • E. Demand graph

  • F. Demand schedule

Types of Market:

Market can be categorized into various types based on the following criteria:

  1. Commodities that are bought and sold.

  2. Channel of distribution. They include the wholesale market and retail market.
    Please read on the concept of a retail market here.

  3. Market structure. (Degree of competition and prices).

In this article, we will discuss on the types of market based on commodity bought or sold.

Please read on the concept of a market in economics here.


Types of Market based on Commodities Bought and Sold

Some overlaps may occur during a careful analysis of the various types of market based on the commodities bought and sold.

The market types (based on commodities bought and sold) are explained below:

1. Primary Products Market: Primary products refers to agricultural produce in their unprocessed (raw) form. In a primary market, unprocessed agricultural products are bought and sold.

Whenever we buy foodstuffs in their raw form, we may likely purchase them from the primary products market.

Similarly, manufacturing industries will usually buy their raw materials (primary products) from this market.

Please read on the types of production here.


2. Consumer Goods Market: This is a market where consumer goods (processed food and other finished products) are bought and sold.

Products like creams, clothes, shoes, processed food and books are bought in the consumer goods market.

You can read on scale of preference and opportunity cost here.


3. Black Market: This is a market setup for the purpose of selling various products outside the government's rader.

Oftentimes, illegal products like firearms, drugs and various computer malware are purchased here. This purchases may be done through a medium termed as dark web.

Understand that crypto currencies are well accepted as means of payment in the black market.

You can read on cheques (checks) as methods of payments here.

Note: A black market has its advantages and disadvantages.

Please read more on black market, its advantages and disadvantages.


4. Auction Market: An auction market is one where a seller will only sell a product to the highest bidder.

Auction markets are usually conducted when one is willing to put out an iconic and legendary material for sale.

Auction market may also be carried out in various religious launchings like harvest and bazaar celebrations.


5. Knowledge Market: Information and knowledge on various products and services are exchanged in the knowledge market. (This is similar to the functions of search engines like Google).

Functionally, knowledge markets can also stimulate the desire to satisfy the demand of something that's yet to exist. (Search engines may not be able to offer this knowledge).

Len Academy is an example of a knowledge market that offers all its services for free. Some other platforms do act as knowledge markets but not without making some form of payments; (which may not be a bad idea).

Also, websites that allow readers to post questions while other readers profer answers to such questions are also considered as knowledge markets.

You can attempt Len Academy questions on various academic subjects here.

Note: An individual's data may be collected in the knowledge market.


6. Physical Market: A physical market is a market whereby the buyers physically meet the sellers before purchases can be made.

Supermarkets, shopping malls and the general community markets are examples of physical market.

Note: The buyer will usually pay via cash or Point of Sale (PoS) to the seller in a physical market.

Please read on methods of payment and characteristics of legal tender here.


7. Virtual or Non Physical Markets: A market is considered to be virtual when the buyers and sellers transact business withing physically meeting each other.

The internet provides an excellent platform for the workings of a virtual market. In this case, such business is done online. Examples of virtual market include Jumia, Amazon, eBay and web host providers.

As a web developer, I have never visited the company that host my websites. I only communicate securely with them online while aslo making all my payments online.

Please read on the internet, world wide web and notable dates of internet evolution here.

It is noteworthy to state that online payment solutions are usually integrated into the web application (website) in order to facilitate payments (from a buyer to the seller in an online market). Importantly, the buyers ought to be careful when making online financial transactions due to the emergence of internet fraud.

Please read more on debit cards and credit cards here.


8. Labour Market: The labour market provides a platform where various job seekers (graduates and non-graduated) link up with the employers of labour in order to be hired.

In developing countries, the labour market will always appear to be populated with a large pool of job seekers searching for the few available jobs. To this end, the government of such countries is requires to make favourable policies for the masses, while also establishing the basic infrastructure towards attracting foreign investors into their country.

You can read more on the concept of a government here.


9. Factor Market: The factors of production are sold in the factor market. Factors of production include:

  • Land

  • Labour

  • Capital

  • Entrepreneur


10. Financial Market: Financial markets are involved in the exchange of liquid assets; (that is, money).

Note: Banks are generally involved in the financial market.

Financial market can be put into the followings:

I. Stock Exchange Market: This is a market that provide investors with an opportunity to buy shares, stocks and securities.

Examples of Stock Exchange Markets are the Nigerian Stock Exchange (NSE), Nasdaq, New York Stock Exchange, London Stock Exchange, Euronext Paris, SIX Swiss Exchange, B3, Canadian Securities Exchange and so on.

II. Bond Market: In a bond market, buyers and sellers are involved in the exchange of debt securities which are usually in agreement with the conditions of a bond.

A bond (in bond market) is a contract made by two or more parties in order to make one of the parties return money with interest at fixed intervals.

In a bond market, If a debtor fails to return the money at the appropriate time or interval, whatever consequent action agreed in the contract between both parties would be effected. An example of such consequent action could be the sale of the debtor's properties.

You can read on the disadvantages of money here.

III. Foreign Exchange Market: Currency are traded in this market. Usually, one person buys or exchanges a currency with the equivalent of another currency.

Since the foreign exchange market focuses more on currency exchange, it's therefore often referred to as a currency market.

Forex (which means Foreign Exchange) is a typical example of a Foreign Exchange Market.

You can read on global acronyms and their meanings here.

IV. Capital Market: This is a market that serves short and long term loans to individuals and institutions.

Capital Market will usually serve the needs of entrepreneurs who are in need of capital to start up a business.

Please read on how to start a home based fish farming here.

V. Money Market: This is a market where short term loans are granted.

Microfinance banks are considered to be an important aspect of the money market especially in the rural areas of developing nations. This is so because they will often give out short term loans to those who require it.

Please read on business structure (sole proprietorship) here.

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Amazing facts in Economics


Below are definitions of demand from the perspective of some notable professors:

The demand for goods is a schedule of the amounts that buyers would be willing to purchase at all possible prices at any one instant of a time.

Professor Mayers

Demand is the various quantities of goods that would be purchased per time period at different prices in a given market.

Professor Hibdon

The demand for anything, at a given price is the amount of it which will be bought per unit of time at the price.

Professor Benham

Generally, demand is defined as the willingness of a person, buyer or consumer to buy a specific quantity of goods or service at a given price and time.

From the above definitions, we can infer that the definition of demand is referenced to three major factors. These are:

  1. Quantity of Goods Demanded

  2. Price

  3. Time

Please read more on the concept of demand here.

In economics, we have various types of cost. These are:

  • Accounting cost

  • Economic cost

  • Outlay cost

  • Opportinity cost

  • Fixed cost

  • Variable cost

  • Direct cost

  • Indirect cost

  • Sunk cost

  • Incremental cost

  • Private cost

  • Social cost

Please read the explanations on the aforementioned types of cost here

A Black market is said to take place when there is illegal buying and selling of goods and services.

Black markets usually take place outside the government's rader and without government's knowledge so as to avoid tax or any other government regulations.

Black market presents the avenue for government prohibited goods like hard drugs, war weapons and firearms to be bought by criminals.

A black market can also occur on the web for cyber criminals or those who are involved in computer hacking. To achieve their malicious aim, these individuals will go into the dark web and purchase or rent their respective hacking tools for a fee. Normally, payments are made in crypto currencies.

However, a black market isn't generally considered as bad. Infact, it has its advantages and disadvantages.

Please read more on black market here

Below are some advantages of black market:

  • Goods and services are sold at a cheaper price.

  • It helps some people make plenty of money.

  • The illegal sales of human organs, for example, the sale of human kidneys have aided in saving some lives.

  • Some people actually depend on black market for their daily bread.

  • Some of the proceeds from black market may be utilized towards the economic growth of a nation. For instance, schools and hospitals had been built with money made from black market.

The law of supply states that:

The quantity of the supplied services or goods will increase as the price increases and they will decrease as the price decreases provided all other factors remain constant.

These constant factors are very important when stating the supply law. They include:

  • The price of input resources

  • The kind of technology used during production

  • The number of suppliers

  • The number of buyers; and so on.


A graph that shows the relationship between the price of a product or service, and its quantity supplied is the supply curve.

Supply curve can be defined as a graphical representation of the direct relationship between the prices of goods and services and the quantity supplied (of such goods and services) within a particular period of time provided all other factors remain constant.

Len Academy - Supply CurvePlease read more on the law of supply and supply curve here