TABLE OF CONTENTS After studying this chapter, students should be able to describe:
the meaning of the terms market and market system ;
the difference between goods and services;
the difference between prices and costs;
the various types of cost;
the purpose and meaning of price;
the various types of revenue and how they are arrived at;
how prices, costs and revenues can be used to determine the break-even point;
how prices, costs and revenues can be used to determine the point at which profit is maximised.
If you or I want to buy some food, we naturally head for a food shop. Why is this? As we know that at a food shop, there is a business that is willing to part with the goods we need in exchange for our money. Similarly, if I want to sell my car, I may put an advert in the local paper in the hope that I can attract interested buyers who will buy the car from me. People who want to buy second-hand cars may well look in the classified section of the local paper.
We can thus readily arrive at a simple definition of the term market: a market is a place where buyers and sellers come...
