Monday, July 3, 2017

Market in Economic Activity

Market in Economic Activity
A market is very significant part in economic activity. Most of economic activity occurs in the market. People get their consumption goods in the market. A production, particularly a trade production, is hold in the market. Furthermore, market is a place where a distribution activity is underway. Before discussing the types of market, it is necessary for you to learn first the definition of market.

The Definition of Market

In the prehistoric era, each person tries to fulfill their necessities with their own production. A market had come up when people get interaction with the function of money. When people used money, the third subject had come up as a contract person between a producer and a consumer. Person who runs a contact between a producer or a consumer is called a trader. A trader does not break off the relationship between the producer and the consumer. Sometimes, there is still the producer sells his product directly to its consumers.

By the relationship between the producers and the consumers, either in direct or by a trader, a market has come up. In the market, the producers and the traders act as sellers, while the consumers act as goods buyers. In the following development, a market does not sell the consumers goods only, but also bargain the services. Thus, the goods producers and the consumers meet in the market. A producer runs the supplying activity of goods and services, while a consumer runs demanding activity activity for goods and services.

Types of Market

Market can be divided into two types; those are concrete markets and abstract markets. To get more understand about concrete markets and abstract markets, read this following elaboration!

Concrete Markets

You have ever gone to market, haven't you? A meet is occurred between a would be producer and a would be consumer. This kind of market is a market under public's definition. In a popular definition, a market is called a concrete market because it sells many different consumers goods. Actually, the concrete market and the abstract market have similarities and differences. Based on the characteristics, both types have some similarities and differences.

The characteristics of the concrete market are follows.
  1. The place where a producer and a consumer meet.
  2. The agents of economy in a concrete market refers to society, either producers or consumers.
  3. It sells consumers daily basic requirements.
  4. The selling goods are available in a location who producers and consumers meet.
  5. The concrete market is widespread markets, either in cities, town, or villages.
Does your town where you live have concrete markets? It probably spreads in every places; our capital, capitals of province, capitals of residence, capital of sub district, and villages in Indonesia. Generally, the concrete market has a specific name. For example, Pasar Johar (Semarang) and Pasar Klewer (Solo).

Mention any other concrete markets in your town or village! Are there any supermarkets in your town? What is a supermarket included to, a concrete market or an abstract market?

Abstract Markets

Besides a concrete market, we have a abstract market or called by unreal market. There are not some trading goods in the abstract market. The producers do not bring with them the trading goods into a location of transaction where they meet each other. When they meet each other, the producers will describe only the kinds and quality of their trading products. Even, the producers and the consumers do not meet each other in a certain location. They get interaction by email, internet, phones, or other means of communication.

The producers describe only the kinds or the quality of their products by those means of communication and do not perform their product directly.

Based the definition, you can find the characteristics of the abstract market as follows.
  1. A contact between the producers and the consumers, either direct or indirect, to hold goods and services transaction.
  2. The agent of economy in the abstract market is a specific subject, for example, the businessmen or the letter of value traders.
  3. Selling specific item of product, for example, share, obligation, foreign currency, and world sell well commodities.
  4. The selling goods are not available at the market. Commonly, the producers perform only the product minster (sample).
  5. The abstract market exist in a certain place, for example, certain banks or certain cities, such as Jakarta, Surabaya, Bremen, Sao Paulo, and New York.
The abstract market has little numbers because it occupies a certain place licensed by the government.
1. Money market is occupied only at a certain bank. The money market is a place of activity of letter of value trade.
  • Call money. It is a proof of money loan in the range of some couple days.
  • Bank of Indonesia Certificate. It is a letter of value released by government (Bank of Indonesia) to collect funds of business effort with the range of a month, two months, or three months.
2. Capital market (stock exchange). It includes stock exchange of Indonesia stock exchange (Bursa Efek Indonesia). The capital market is a place of the transaction of long term letter of value (more than a year).

The types of the selling letter of value are follows.
  • Stock, it is a letter of proof of capital investment.
  • Obligation, it a letter of formal obligation admission from government or a certain company in the range of more than a year.
The capital market is managed by the organization or the organizer of capital market. They are the executive committee of the capital market now known as supervisor committee of the capital market (Bapepam) and PT Danareksa. Bapepam is a committee under the Monetary Department which function to develop and to supervise the capital market. PT Danareksa has a function to purchase stocks from some companies and to resell the stocks to a stock exchange.

3. Foreign currency. It is a place to take a trade of foreign currency, such as the foreign exchange banks. In running a trade with foreign buyers, some traders need foreign currency to make a payment. Some traders are able to buy foreign money in the foreign currency exchange.

4. Indonesian Commodity Exchange (Bursa Komoditas Indonesia/BKI). It is abstract market to sell world well-sell commodity. For example, rubbers, coffee, cottons, soybeans, and textiles.

5. Commodity exchange in abroad, such as rubber exchange in New York (USA), tobacco exchange Bremen (Germany), coffee exchange in Sao Paulo (Brasil), and petroleum in the Middle East countries.

6. Labour market. It is a demand and a bargaining activity of the labour. The labour market is managed by the Department of Labour or man power distribution bureau.

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