Chapter - 12 Undestanding Markets
Buyer and Seller Interaction:- The buyer and seller discussed the price of the goods being sold.
Initial Offer:- The seller quoted a high price for the item.
Counter Offer:- The buyer offered a lower price, stating it was too expensive.
Bargaining:- Both parties exchanged reasons — the seller explained quality or scarcity, the buyer emphasized budget or availability elsewhere.
Agreement:- Finally, they agreed on a mid-point price acceptable to both.
Outcome:- The transaction was completed, showing how negotiation helps in settling on a fair price in markets.
Prices and Markets
1. What happens if the seller fixes the price very high?
- Buyers may not be willing to purchase.
- Fewer transactions take place.
- The seller may not earn as expected.
- Leads to unsold stock of goods.
2. What happens if the seller fixes the price very low?
- Many buyers will want to buy.
- Seller may run out of stock quickly.
- It may not be profitable for the seller.
- Seller suffers loss or low profit.
3. What happens when the price is just right?
- Both buyers and sellers are satisfied.
- The price is affordable for buyers and profitable for sellers.
- This leads to a balanced market with regular transactions.
Markets Around Us
1. Types of Markets:
a. Physical Market
- Buyers and sellers meet face-to-face.
- Examples: Weekly haats, local markets, malls, street vendors.
b. Online Market
- Transactions happen using apps or websites.
- No need to meet physically.
- Goods and services like groceries, electronics, online classes are available.
c. Stock Market
- No goods are exchanged.
- Shares of companies are bought and sold.
- More details are studied in higher classes.
2. Domestic and International Markets:
a. Domestic Market
- Trade happens within the country.
- Example: Buying paper from Indian paper mills to print books.
b. International Market
- Trade happens between countries.
- Example: India exporting spices to other countries or importing mobile phones.
3. Wholesale and Retail Markets:
a. Wholesalers
- Buy in large quantities from farmers or manufacturers.
- Store goods in godowns or cold storage (for perishables).
- Supply to retailers.
b. Retailers
- Sell to the final consumers (like us).
- Sell in small quantities.
- Examples: Grocery shops, salons, restaurants.
4. Distributors and Aggregators:
a. Distributors
- Help wholesalers reach distant retailers.
- Example: Milk middlemen in the AMUL story.
b. Aggregators (in online markets)
- Receive goods in bulk from manufacturers.
- Store in warehouses.
- Deliver products to customers after online orders.
The Role of Markets in People’s Lives:
1. Economic Role of Markets:
- Markets connect producers and consumers.
- Help people access goods and services they cannot produce themselves.
- Enable transactions that support individuals, households, and businesses.
2. Example – Aakriti the Artist:
- Aakriti makes oil paintings but finds it hard to sell them.
- Some products like art, antiques, or handmade crafts do not have a ready market.
- This affects sellers (hard to find buyers) and buyers (hard to find authentic sellers).
3. Ways Artists Can Find Buyers Today:
- Online platforms (websites, art apps, social media).
- Art exhibitions, fairs, and galleries.
- Partnering with interior designers or art dealers.
- Online auctions and marketplaces.
4. How Markets Benefit Society:
- Producers learn what people need (e.g., energy-efficient refrigerators).
- Encourages innovation and better quality.
- Markets help improve living standards over time.
5. Non-Economic Role of Markets:
- Markets build long-term relationships (e.g., with tailors, doctors, grocers).
- Some families have trusted vendors for generations.
- Markets support community bonding and social trust.
- To ensure fair interactions between buyers and sellers.
- To protect consumers and producers from unfair practices.
- To correct imbalances where markets fail to work effectively.
- Set for essential goods like lifesaving drugs to make them affordable.
- Protects buyers from overpricing.
- Set for agricultural goods like wheat, paddy, and maize.
- Ensures farmers get fair payment.
- Minimum wages are also fixed to protect workers.
- If prices are too low: Producers lose interest.
- If prices are too high: Consumers suffer.
- Government enforces standards for goods and services.
- Especially important in healthcare (e.g., medicine approval and testing).
- Ensures safe, effective, and reliable products.
- Markets can create pollution or health risks (e.g., single-use plastic).
- Government regulates and restricts harmful production and waste.
- Also monitors weights and measures to prevent cheating.
- Some services do not generate profit, so the government provides them:
- Parks
- Roads
- Police and safety
- Welfare schemes
- Ensures equal access for all citizens.
- Government rules help markets function fairly.
- But too many rules can also make markets less efficient.
- FSSAI – For food safety
- Full form: Food Safety and Standards Authority of India
- Found on: Food packets (e.g., gram flour)
- Ensures: Food is safe to consume
- ISI Mark – For industrial and electrical goods
- Issued by: Bureau of Indian Standards (BIS)
- Found on: Electrical appliances, building materials, tyres
- Ensures: Product is safe and reliable
- AGMARK – For agricultural produce
- Full form: Agricultural Marketing
- Found on: Fruits, vegetables, cereals, spices, etc.
- Ensures: Purity and quality of agricultural items
- BEE Star Rating – For energy efficiency
- Full form: Bureau of Energy Efficiency
- Found on: TVs, refrigerators, ACs, etc.
- More stars = Less electricity usage = Lower bills + Good for environment
- Opinions from family, friends, and neighbours influence buying decisions.
- Trusted recommendations often come from personal experience.
- Found on shopping websites and apps.
- Consumers share experiences and rate products/services.
- Help in deciding whether to purchase or avoid a product.
- Physical market – Requires physical presence of buyers and seller
- Online market – Buyers and sellers meet virtually and can transact at any time
- Domestic market – Lies within the boundaries of a nation
- International market – Goods and services flow outside the nation’s boundaries
- Wholesale market – Deals in bulk quantities
- Retail market – Serves the final consumers with goods and services
- Milk packet – Shows the FSSAI logo.
- Electric iron – Has the ISI mark.
- Packaged honey – Has AGMARK and FSSAI.
- Refrigerator – Shows BEE Star Rating.
- Wheat flour packet – Has FSSAI, sometimes AGMARK.
- They may be locally made or unbranded.
- The producer may not have applied for certification.
- It may not be legally required for that item.