Market and Aid to Trade – JSS2 Business Studies Lesson Note (First Term)

A market is a place where buyers and sellers meet to transact business and ownership of goods and services is transferred.

Behavioural objectives

By the end of the lesson, students should be able to:

1. Define a market and give examples.
2. List the three types of market and name institutions in each.
3. Explain what aids to trade are.
4. List and explain the seven aids to trade.

What is a market?

A market is a place where a buyer and a seller meet to transact business and transfer ownership of goods and services.

• Physical market: buyers and sellers meet face to face, as in Idumota market and Katangowa market.
• Market without physical contact: buyer and seller communicate by GSM or the internet, as on Jumia and OLX.

What are the types of market?

There are three types of market: the commodity market, the capital market and the money market.

What is a commodity market?

The commodity market is where physical goods are bought and sold.

• Open market: a large public place where many traders sell, such as Idumota market.
• Market stall: a small table or stand where a trader displays goods.
• Mobile shop: a trader who carries goods from place to place to sell.

What is a capital market?

The capital market is where long-term funds are raised and traded.

The institutions that trade in the capital market are:

• Stock exchange market: where shares and similar securities are bought and sold.
• Merchant banks: banks that help businesses raise large, long-term funds.
• Insurance companies: they invest the premiums they collect.

What is a money market?

The money market is where short-term funds are borrowed and lent.

The institutions in the money market are:

• Pension funds managers: they manage workers’ retirement savings.
• Commercial banks: they take deposits and give loans.
• Brokerage firms: they act as agents between buyers and sellers.
• Cooperative societies: they collect members’ savings and lend to members.

How do the three markets compare?

What are aids to trade?

Aids to trade are services that make trade easy or facilitate trade.

There are seven aids to trade:

1. Advertising
2. Banking
3. Communication
4. Insurance
5. Tourism
6. Transportation
7. Warehousing

What is advertising?

Advertising is creating awareness in the mind of the public about the existence of old and new products in the market.

The media of advertising include:

• Radio: advertisements are heard by listeners.
• Television: advertisements are seen and heard.
• Newspaper: printed advertisements read daily.
• Magazine: printed advertisements in periodic publications.
• Journal: advertisements placed in professional or academic publications.
• Cinema: advertisements shown before or during films.
• Billboard: large boards placed along roads.
• Internet: online advertisements and social media.

What is banking?

Banking is making funds available for businesses and individuals.

• Loans and overdrafts: banks lend money to traders and businesses.
• Safe keeping: banks keep money and valuables.
• Financial advice: banks advise customers on money matters.

What is communication?

Communication is a means of sending and receiving information from one place to another.

• Link between traders: it connects suppliers with customers.
• Means used: telephone, telex, internet and e-mail.

What is insurance?

Insurance provides security or protection against risk or loss in business.

• Marine insurance: covers ships and goods carried by water.
• Motor vehicle insurance: covers vehicles against accident and damage.
• Fire insurance: covers property against loss by fire.
• Life assurance: pays money to the family when the insured person dies.

What is tourism?

Tourism is travelling to a place for recreation or holidays.

• Effect on trade: tourist centres increase trade activities, as visitors buy food, goods and services.
• Olumo Rock: a tourist centre in Abeokuta.
• Yankari Game Reserve: a tourist centre in Bauchi State.
• Obudu Cattle Ranch: a tourist centre in Cross River State.

What is transportation?

Transportation provides the means of carrying people and goods from one place to another.

• Land: road and rail, for example lorries and trains.
• Water: ships, boats and canoes.
• Air: aeroplanes, used for fast delivery.
• Pipeline: used for liquids and gases, such as crude oil.

What is warehousing?

Warehousing is the provision of facilities to store goods and materials until they are needed.

• Purpose: it ensures a steady supply of goods.
• Warehouse: a place where finished goods are kept until they are needed.

The types of warehouse are:

• Ordinary warehouse: stores goods for ordinary use by the owner.
• Bonded warehouse: stores imported goods until customs duty is paid.
• Public warehouse: stores goods for different traders for a fee.

Evaluation

1. Define a market and give two examples.
2. Name the three types of market.
3. Give three examples of commodity market.
4. Name three institutions that trade in the capital market.
5. List and explain five services that make trade easy.

Assignment

In your exercise book, state four types of insurance and list five media of advertising.