Why do markets exist? If you think about the question in its most fundamental form, markets are the exchange of commodities or services for payment. That is not quite as simple as it sounds though. The reason is that markets have both short and long terms of operation. A market can last a very short time such as a day or a week, but can also go on indefinitely like a market over the long term.
For example, a market will often be defined by its price. A bargain in goods is a market. The goods that are traded are usually bought at a discount because of demand or supply. Sometimes people will offer items at a discount because they have been idle or because they are now in season. There are endless examples of this kind of thing.
So why do market prices occur? The market does not really answer that question since it is an object to be measured. The market can be defined by supply and demand and a number of other factors. These include the political atmosphere, the amount of production, the amount of input needed to produce the goods, and the speed of production. In any given market situation, there are always a buyer and a seller.
The underlying assumption behind the question of why do markets exist? The assumption is that prices are established by forces outside of the market. In other words, goods and services are produced in large quantities so that the prices are set.
If you look at the market, you will see that there are two main forces that determine the market prices. They are demand and supply. When there are high demand and low supply, the price goes up. Conversely, when there is a low supply and high demand, the price goes down. The market can go up for goods and become stagnant or drop down for goods and become stagnant again.
Prices change because there are increased and decreased amounts of production. When there is a drop in production, the price of goods increases. On the other hand, when there is an increase in production, the price of goods decreases. Because the supply and demand are in balance, the price of goods or services never changes. With the introduction of technology and the ability to electronically communicate with one another, the need for physical locations has been eliminated. . . . . . . Today, anyone can have the ability to supply and demand goods and services worldwide.