This chapter discusses the concept of the market as a method for distributing goods and services. It develops the concept of market demand and then market supply, bringing the two together to articulate the concept of the market equilibrium. This is used to illustrate how markets determine production levels and prices for goods and services. Government interventions in the form of price floors and ceilings are discussed, followed by material on the market failures in the provision of public goods and due to the presence of externalities. This serves to highlight the complex relationship between governments and markets. Finally, the chapter introduces the concepts of price elasticity and income elasticity of demand to demonstrate the usefulness of market analysis.