Introduction to Business Module
Federal Reserve Monetary Policy Market
Computer Industry Returns Market
MSFT (Microsoft) Price Level Market
What Is a Market?

Two or more
individuals, groups, or
both, who come
together to make
exchanges. They are
often referred to as a
Buyer and Seller.
How, What and When Do They
Exchange? They Exchange?
Topics




Resources with differing levels of scarcity
Different combinations of exchanges
What roles can participants play in the
exchange?
Types of Markets
Resources With Differing
Levels of Scarcity



Physical goods, such as, Soap and Cars
Services, such as, Haircuts and
Checking Accounts
Money
Different Combinations of
Exchanges (1)
Goods for Goods


Bartering, such as, a farmer who trades
fruit grown on their farm for wine
produced by another farmer
Countertrade, such as, Ford Tractors
traded for commodities, such as, wheat,
hemp, or other industrial products
Different Combinations
of Exchanges (2)
Goods for Money & $$$ for Goods


Purchasing household products from Walmart
Selling your car in the classified advertisements
Different Combinations of
Exchanges (3)
Services for Money
Money for Services


Purchasing phone service from MCI
Repairing a neighbors car for money
Different Combinations of
Exchanges (4)
Promises for Money
Money for Promises


Paying money for car insurance in exchange
for a promise by the seller to compensate you
for loss or damages to your car
Receiving money from a lender (Student
loans), in exchange for your promise to repay
the loan plus interest, some time in the future
Different Combinations of
Exchanges (5)
Money for Money

While visiting Paris, exchanging U.S.
Dollars for French Francs
What Roles Can Participants
Play in the Exchange?


Buyer or Seller
Rule Maker
The Role of Buyers and Sellers
Price Setter or Price Taker


Because of the scarcity of the
resource, when purchasing gasoline,
the buyer is a price taker and the gas
company is a price setter
What are the roles of Shaq and the
Los Angeles Lakers?
The Role of the Rule Maker
Rule makers set the ground rules for
a particular market and its
transactions
 NASD and its members
 SEC in the securities market
Types of Markets



Legal and Illegal
Markets
Real and Virtual
Markets
24/7 and Time Limited
Markets
Legal and Illegal Markets


Purchasing a prescription
drug from your local
pharmacy
Purchasing cocaine from a
drug dealer
Real and Virtual Markets


Purchasing your textbook at
your college bookstore
Purchasing your textbook at
Amazon.com
24/7 & Time Limited Markets


Purchasing your textbook at
Amazon.com at anytime of
day and any day of the week
Auctions, such as, eBay,
where the timeframe to
participate or complete the
transaction is limited and
expires
Markets of Interest
Labor
 Rules created by legislation, such as,
minimum wage laws, child labor
laws, Equal Employment Opportunity
Laws (e.g. ADA)
 Organized labor sellers
Markets of Interest
Land
 Rules intensive, attorney or
realtor involved
 Land is scarce and unique
 There are no substitutes
Markets of Interest
Exchange Rates

Market Players include:




Individuals purchasing and selling foreign currency
Multi-national Corporations, such as Ford, who
periodically need to repatriate foreign currency
into US Dollars
Large global banks
Governments who enter the exchange to
strengthen or devalue a currency
Markets of Interest

Capital and Financial

Stocks and Bonds
Markets of Interest
Other Financial Markets
 Commodities


IEM
Spot Market and Futures Market
Conclusion
Other Financial Markets
 Commodities


IEM
Spot Market and Futures Market
What is The Iowa Electronic
Market (IEM)





The IEM is an on-line, computerized
market
Contracts are based on real-world
events
A research tool
A teaching tool
Open to academic community
IEM Resources
IEM Introduction PowerPoint Presentation
http://www.biz.uiowa.edu/iem/trmanual/introIEM.ppt
IEM Traders Manual
http://www.biz.uiowa.edu/iem/trmanual/
WebExchage Users’ Guide
http://iemweb.biz.uiowa.edu/webexmanual/