Markets, Prices, and Marketmaking

This chapter is a brief exposition on prices and markets that differ slightly from what one may have heard in a college economics or finance course. Market is defined as the trading floor of the securities exchanges. In short, there are many different institutions that one identifies as a market: supermarkets, flea markets, black markets etc. It defines prices as a ratio of quantities and is the toil and trouble of acquiring commodity. Lastly, it focuses on the marketmaking whose rule is buy low and sell high. The chapter is useful for those people who have not worked in the financial community. An understanding of the concepts of prices, market and marketmaking are essential, and will set the stage for what follows.