Read the given passage and answer the questions:
| In common language the term market means a specific place where buyers and sellers of a commodity meet and exchange their goods. But in Economics it is not necessarily a place but it is an arrangement through which buyers and sellers come in contact with each other directly or indirectly and exchange of goods takes place among them. Market can be classified on the basis of place, time and competition. Market on the basis of competition is perfect competition and imperfect competition. Perfect competition is an imaginary concept of market and in reality, we observe various types of imperfect competition like monopoly, duopoly, oligopoly and monopolistic competition. In practice monopolistic competition is used. In this market there are some features of perfect competition and monopoly acting together. The uniqueness of this market lies in the fact that a difference is made between cost of production and selling cost. Selling cost refers to the cost incurred by the firm to create more demand for its product and increase the volume of sale. It includes expenditure on advertisement, hoardings, window display etc. |
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| Questions: |
| Explain the concept of Market from Economic sense. |
| Write the classification of Market. |
| Write your own opinion about selling cost. |
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Start your 14-day free trial to unlock the full solution →The passage explains the economic meaning of market, its classification, and the idea of selling cost under monopolistic competition. The three questions are answered below.
1. Concept of market in the economic sense: In everyday language a market means a fixed place where buyers and sellers gather to trade. In economics, however, a market is not necessarily a place; it is any arrangement or mechanism through which buyers and sellers of a particular commodity come into contact with one another — directly or indirectly, and even through phone, internet or agents — and the exchange of goods takes place among them at an agreed price. What matters is contact between buyers and sellers, not a physical location.
2. Classification of market: As the passage states, markets can be classified on three bases:
- On the basis of place — local, regional, national and international (world) markets.
- On the basis of time — very short period (market period), short period, long period and very long period (secular) markets.
- On the basis of competition — perfect competition and imperfect competition; imperfect competition further includes monopoly, duopoly, oligopoly and monopolistic competition. …
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