Understanding Markets

How markets bring buyers and sellers together, wholesale and retail, exports and imports, online markets, and how the government protects buyers.

Key ideas

A market is where buyers and sellers agree on a price for goods or services.
Physical markets meet in person; online markets work through apps and websites, and aggregators gather many sellers in one place.
A wholesaler buys in bulk from producers; a distributor carries goods on; a retailer sells small amounts to consumers.
Each trader adds a margin, so the price rises from farm to shop.
A domestic market is within a country; exports and imports make an international market.
The government provides public goods (parks, roads, policing) and sets a minimum support price so farmers do not lose when prices fall.
Certification marks and labels protect buyers.

Remember

Export / import	selling to / buying from another country
Trader’s margin	selling price − buying price
FSSAI	packaged food checked for safety
AGMARK / ISI	farm products / quality of goods like electricals (BIS)
BEE star label	more stars = less electricity used
Food label	net quantity, MRP, date of manufacture, best-before date
Ima Keithal (Imphal)	market run by about 3,000 women

Watch out

Mixing up wholesalers (sell in bulk to traders) and retailers (sell small amounts to consumers).
Mixing up exports (sold abroad) and imports (bought from abroad).
Reading more BEE stars as more electricity: more stars means less.

Worked example

A farmer sells wheat to a wholesaler at ₹24 a kg. The wholesaler sells to a retailer at ₹30 and the retailer to consumers at ₹36. (a) How much does each trader add per kg? (b) What does a consumer pay for 10 kg? (c) Why does the government set a minimum support price for wheat?

Working: 30 − 24; 36 − 30; 10 × 36

Answer: (a) wholesaler ₹6, retailer ₹6 (b) ₹360 (c) So farmers do not make a loss when prices fall.