The Dynamics of Market Economy: A Comprehensive Overview

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22 Mar 2024

Market is a place where buyers and sellers meet at one place and products and services are bought and sold there, we call it market. That market can be physical where people are face to face like Retail Store or the market can also be virtual (Virtual) like online market where there is no physical contact of buyer and seller.

In the market, the seller sells his product or services to get money and the buyer buys it to fulfill his need or want. In most markets there can be more than one buyer and seller. The price of products or goods in the market is kept considering the demand and supply of that product.

Market is a place where buyers and sellers meet to transact products or services.

Market can be physical like retail store or virtual like online store.

The seller sells the product or service to earn money and the buyer buys it to satisfy his need or want.

The price of goods and services is kept in the market considering the demand and supply of the market.

The characteristics of a market include an area, buyers, sellers, and an available good.

Understanding The Market

Market is a place where two or more parties meet and conduct economic transactions. Market exchanges or transactions may involve goods, services, information or currencies that move from one party to another. Broadly speaking, market is a place where buyers and sellers interact and transact.

Market is a very big word and it includes many different things. For example, the word market also refers to the share market or stock market, which is the place where stocks of companies are bought and sold. The term Market also refers to people or groups who prefer to buy a particular item at a specific place. Or market is also called the area of any trade or industry.

Some rules and decisions are set by the economic system to balance and shape the market. That system is called market economy. In this economic system, investment, production, distribution, and price of products and services are determined by the demand and supply of businesses or buyers.

Supply And Demand of Market

No matter the context, the market determines a price for products or services. This price is kept considering the demand and supply of the market. Market demand and supply is a fundamental idea of economics. (Demand) Demand is generated by buyers and (Supply) is supplied by sellers.

The quantity of any product or service is determined by what buyers want and how much they are willing to buy. When people demand more goods or services, the seller increases his production and at that time the seller increases the price of the product or service to get more profit. When people's demand is less, the seller reduces his price and also reduces the number of products produced.

Physical And Virtual Market

Physical market is the place or place where the buyer physically meets the seller face to face and buys the product or service by paying him money. Physical market is also called cash market because here cash transactions take place immediately. Like: Shopping Mall, Retail Store, these are examples of physical market.

In virtual market, people buy products or services online on the internet. In the virtual market, buyers and sellers do not meet physically and in most cases do not even talk. In this, all transactions are done through internet only. Like: Amazon, Flipkart, etc. These are examples of virtual market.

Types of Market

Markets can be classified based on a variety of factors. Such as: type of products, place, time, size, area of target customers, size and many other factors are there on the basis of which we decide the types of market. Apart from the two most basic markets, physical market and virtual market. There are many other types of markets where people meet to transact.

Underground Market

Underground market or black market refers to an illegal market. The transactions done here are done secretly from the government. To save this high tax, many such illegal markets exist and illegal products like drugs and weapons are bought and sold here. In such markets, transactions take place in cash or in untraceable currencies. Due to which it is difficult to catch them.

Auction Market

In the auction market, many people are called together to buy and sell specific products or services and bid on it. The one who makes the highest bid gets the product or service.

Financial Market

Financial Market is where transactions of securities, currencies, Bonds, Stocks and other securities are done. For example: Stock is bought and sold in the stock market.

Knowledge Market

Knowledge Market is the market where information or knowledge based products are traded. For example, if someone wants to learn digital marketing, he can buy the course.

Features of A Market

Some characteristics have been mentioned which help you in defining the market and are necessary for the market to function properly. Below are some basic market characteristics that shape the market.

MARKETPLACE

This is where the transaction is set up between the buyer and the seller. But we must keep in mind that, it does not necessarily have to be a physical place or location. This can be any place where both parties are present.

BUYERS AND SELLERS

For any market to function, there must be both buyers and sellers. If a seller is selling a product but there is no buyer for it, then there cannot be a market there.

PRODUCT AND SERVICE

One type of market depends on one type of product. That is why that product or service is necessary to keep the market functioning properly. Example: Rice is a product for which Rice Market is formed. There is an electronic market for electronic products.

Conclusion

In this we learned how the market plays a huge role in the economy. Market is a place that allows businesses, sellers, consumers and governments to sell and buy their products or services. We also learned that the price of any product is kept considering its demand and supply in the market. And to keep the market properly balanced, the market economy regulates it.

We learned about physical and virtual, which we can also call offline & online markets and also learned about other types of markets. So how did you like this article? Please tell us by commenting and to stay with us, also subscribe to join Swayash Family.