Market Basics
What is a market?
A place where buyers and sellers exchange goods, services or information.
What does the term demand mean?
The amount of a good or service consumers are willing and able to buy.
What is bought and sold in the housing market?
Houses and other residential properties.
What is the stock market?
A market where people buy and sell shares in companies.
What is an investor?
A person or organisation that buys shares hoping to make money in the future.
What are the two main groups of people involved in a market?
Buyers and sellers.
What does the term supply mean?
The amount of a good or service producers are willing and able to sell.
Identify one reason why demand for housing increased in Perth in 2024.
Population growth or migration.
What is a share in a company?
A small piece of ownership in a company.
What is a dividend?
A payment that some companies make to shareholders from their profits.
What is a market economy?
An economic system where the production of goods and services is determined by supply and demand.
What usually happens to prices when demand increases but supply stays the same?
Prices generally increase.
What usually happens to house prices when housing demand is greater than supply?
House prices generally increase.
Why do companies sell shares to investors?
To raise money to grow their businesses, develop new products or expand into new markets.
Identify one risk of investing in shares.
Share prices can fall, causing investors to lose money.
Name three different types of markets.
Housing market, stock market and global markets.
Explain how competition between businesses can benefit consumers.
Competition can lead to lower prices and better-quality goods and services.
Identify two ways the government influences how markets operate.
Through laws and regulations, and through taxes and fees.
What is the Australian Securities Exchange (ASX)?
Australia's main stock exchange, where shares are bought and sold.
You buy 10 shares for $5 each and sell them for $8 each. How much profit do you make before fees and taxes?
$30 profit. The shares originally cost $50 and were sold for $80.
Explain why Australia is described as having a mixed market economy.
Because both private businesses and the government play a role in the economy.
A drought reduces the supply of watermelons while demand remains high. Explain what is likely to happen to watermelon prices and why.
Prices will likely increase because fewer watermelons are available while demand remains high.
Explain how population growth, migration and limited housing supply contributed to rising house prices in Perth.
Population growth and migration increased the number of people wanting houses. Housing supply did not keep up with demand, causing prices to rise.
Explain how supply and demand can cause the price of a company's shares to increase or decrease.
When more people want to buy shares than sell them, prices generally increase. When more people want to sell than buy, prices generally decrease.
Explain two ways investors can make money from shares and why investing involves financial risk.
Investors can make money by selling shares for a higher price than they paid or by receiving dividends. Investing involves risk because share prices can fall and investors may lose money.