--- title: "How markets work" description: "Buyers and sellers trade goods, services and work; supply, demand and competition can change prices and wages; profit-seeking firms, charities and unions have different purposes" canonical: https://lightmysky.com/learn/civics-and-economics/how-markets-work-mt_IWiQW8Sq2R source: https://lightmysky.com/learn/civics-and-economics/how-markets-work-mt_IWiQW8Sq2R.md retrieved: 2026-11-12 --- > **Agent view.** This is the Markdown twin of the page, for tools and assistants. > When to use this site, and the call that answers each job: https://lightmysky.com/agent-instructions.md > API description (OpenAPI 3.1): https://lightmysky.com/openapi.json · Authentication: https://lightmysky.com/auth.md > Pricing: https://lightmysky.com/pricing.md · Catalog: https://lightmysky.com/llms.txt · Full catalog: https://lightmysky.com/llms-full.txt > Every machine-readable file on this domain: https://lightmysky.com/.well-known/ai-catalog.json > Ask for Markdown with `Accept: text/markdown`, a `.md` address, or `?mode=agent`. # How markets work Buyers and sellers trade goods, services and work; supply, demand and competition can change prices and wages; profit-seeking firms, charities and unions have different purposes Subject: Civics & Economics · Area: Economics · Ages 11 to 14 Page: https://lightmysky.com/learn/civics-and-economics/how-markets-work-mt_IWiQW8Sq2R ## Ready when they can - Explain a price change using supply and demand (e.g., 'umbrella prices rise in a sudden storm because demand jumps') - Describe the labour market as a market (employers buy work, workers sell it, and the wage is the price) - Distinguish institutional purposes: a profit-seeking firm aims to earn profit for owners, a union bargains for workers, and a charity serves a mission ## Lesson: How markets work A market connects buyers and sellers of goods, services or work. Sellers offer prices; buyers decide whether to buy. Agreement does not prove a price is fair to everyone. Demand describes what buyers are willing and able to buy at different prices. Supply describes what sellers are willing and able to offer. When buyers want more or less at each price, that is a change in demand. You have learned about supply and demand. Higher demand with unchanged supply tends to raise prices. Lower demand tends to lower them. Less supply with unchanged demand can also raise prices. These are pressures, not promises that every posted price changes. A seller may keep its price fixed even when it sells out. *(drawing: In this example, more buyers want umbrellas after a storm, supply is unchanged, and the seller raises the price from $4 to $9.)* **Example.** Find a price increase by subtracting the old price from the new price: $9 - $4 = $5. A stated sales pattern can predict an amount too. Suppose each $1 price cut adds 6 sales. A $2 cut has two $1 steps, so it adds 6 + 6 = 12 sales. Use that calculation only when the question gives the pattern. In the labour market, workers offer work and employers pay wages for it. Maria offers babysitting; families pay her hourly wage. Employers competing for a limited number of available workers may offer higher wages. If more qualified workers seek the same number of jobs, wages may face downward pressure. Contracts and wage rules can limit changes. A profit-seeking firm aims to earn profit for its owners. A union represents workers and bargains with employers over pay and working conditions. Bargaining does not guarantee the outcome members want. A charity serves a mission, such as providing meals. It may collect donations or charge fees. Money left after costs supports its mission rather than being paid to owners as profit. With other things unchanged, a lower price usually increases the quantity buyers want and can buy. This is the law of demand, not a change in tastes. Here, buyers want three bottles at $4 but seven at $2. At a stated price, a shortage means buyers want and can buy more than sellers offer. A surplus means sellers offer more than buyers want. Matching amounts are equilibrium in a market model. A shortage can persist if the price stays fixed or more stock cannot arrive quickly. **Recap.** Supply, demand and competition put pressure on prices and wages. Actual changes can take time. Firms, unions and charities have different purposes. *Lesson, questions and flashcards written for this dataset. Economic references informed factual study; no source prose was copied.* ## Practice 13 questions on this page, each with its working shown. ## Needs first - [How the economy works](https://lightmysky.com/learn/life-skills/how-the-economy-works-mt_udgPy5oAvR) ## Optional connections - [Incentives and Choices](https://lightmysky.com/learn/civics-and-economics/incentives-and-choices-mt_KxkoDkbjPy) ## Opens up - [Demand and Supply as Curves](https://lightmysky.com/learn/civics-and-economics/demand-and-supply-as-curves-mt_FyYrlvzXct) - [Inflation, Unemployment and Growth](https://lightmysky.com/learn/civics-and-economics/inflation-unemployment-and-growth-mt_Zr0YyQwtKy)