How Markets Work and Business Opportunities

Explain what a market is and why it does not need to be a physical place. Name three different markets you use (a physical one, an online one, and one for 'things' that do not look like goods, such as private tutoring hours).

Name the two 'sides' of any market and an example of each in these specific markets: the labour market for summer camp leaders, the flat rental market in your city and the second-hand video game market. Who supplies and who demands in each case?

State the law of demand and the law of supply in your own words. Apply them to this case: at the school fair, the crêpe stall lowers its price from $3\ \text{€}$ to $2\ \text{€}$; what do you expect to happen to the quantity students want to buy and the quantity the stall would want to sell?

The diagram shows the market for bracelets at the school fair: the demand curve (D), the supply curve (S), and the point where they intersect (E).

1. a) Read the equilibrium price and quantity from the graph.
2. b) Explain what that point E means: what happens to the surplus bracelets or to the buyers left without a bracelet at that price?

Explain who 'calls the shots' in a market: can the seller set any price they want? Use the example of the fair's crêpe stall: if it prices one at $10\ \text{€}$, what happens? And at $0,50\ \text{€}$? Conclude by explaining how buyers and sellers 'negotiate' without speaking to each other.

Classify each event according to whether it affects the supply or the demand for strawberries in your city: (a) a frost spoils half the harvest; (b) a study says strawberries are very healthy and having them for breakfast becomes fashionable; (c) the price of the fuel used by lorries rises; (d) a TV series comes out in which the main character runs a strawberry shop.

Explain what a surplus is (when there is product left over) and a shortage in a market (when there is not enough), with this case: one school market stall made $80$ sandwiches and sold $35$; another made $20$ Spanish omelettes and they sold out in $10$ minutes. What should each stall do next year with price and quantity?

In the juice market at the fair, the following data was recorded:

1. a) State the equilibrium price and justify your answer.
2. b) Explain what disequilibrium exists at $1\ \text{€}$ and $3\ \text{€}$, and how that pushes the price towards equilibrium.

Suddenly it becomes fashionable among nearby secondary schools to wear your cooperative's bracelets. Explain which curve shifts, in which direction, and what is to be expected of the new equilibrium price and quantity. What should the cooperative do if it wants to ride this wave?

In the market for tickets to the school concert ($5\ \text{€}$ a ticket, $150$ tickets), $300$ people have signed up.

1. a) Describe the mismatch with the language of the market and explain what would happen to the price if tickets could be freely resold.
2. b) The organisers don't want to raise the price, for fairness: propose two alternative allocation systems (a draw, first come first served, priority for helpers) and analyse what each one encourages.

So that 'nobody goes without a snack', the school market organising team sets a maximum price ceiling of $1\ \text{€}$ per portion when the equilibrium would be $2,50\ \text{€}$. After half an hour, nothing is left and many students leave without a snack while others have bought three portions.

1. a) Explain using supply and demand why shortages occur.
2. b) Propose two solutions that maintain the community spirit without causing queues or reselling, and analyse their effects.

A lemonade stall next to the sports centre analyses its environment. Classify each factor into microenvironment (near, directly affects the business) or macroenvironment (general, affects everyone): (a) another juice stall $50$ metres away; (b) the nationwide rise in the price of sugar; (c) the lemon supplier failing to deliver on Mondays; (d) teenagers becoming increasingly concerned about sugar; (e) a new law on allergens. Explain the difference in your own words.

Two friends want to set up a mobile homemade lemonade stand on Saturday mornings next to the municipal sports center. Before starting, they gather the following information from the environment:

1. The town council requires a public space occupancy permit with a fixed fee of $40\ \text{€}$ per month and a food handler's certificate.

2. The sports center's cafeteria sells industrial soft drinks for $2\ \text{€}$, and its regular clientele complains that there are no natural drinks.

3. The wholesale price of lemons has increased by $30\ \%$ due to a pest in the region.

4. The weather forecast predicts rain or temperatures below $12\ ^\circ\text{C}$ during four of the six months of the season.

1. a) Classify each of the four factors into the microenvironment or macroenvironment. Justify which of them most lethally threatens the initial viability of the project, differentiating between variable costs and barriers to entry.
2. b) Design a redesign of the business model that allows bypassing the two largest constraints detected (legal and climatic) by collaborating with an agent of the microenvironment instead of competing against it.

Your team has spotted that there is nowhere in the neighbourhood to get a bicycle fixed in under a week: the only repair shop is running $10$ days late with $300$ bikes on its list.

1. a) Describe the market mismatch and formulate the business opportunity: what you would sell, to whom and with what concrete promise.
2. b) Analyse three risks of jumping into that gap (maybe it is empty for a reason: lack of mechanics, seasonality, low margins) and what you would check before investing $200\ \text{€}$ in tools.