A market is any place where buyers and sellers meet to trade products. The market price is the amount customers are charged for items and depends on demand and supply.
Demand is the amount of a product customers are prepared to buy at different prices. Supply is the amount of a product businesses are prepared to sell at different prices.
There are many different types of market. The goods market is where everyday products such as DVDs are traded. The commodities market is where raw materials such as wheat are traded.
Market prices change when supply and demand patterns change.
Changing market prices affect a firm's costs. When the price of commodities such as oil and electricity increases, a business finds its own costs of production rise. Higher costs are either: