Concept of market
A firm has to play a dual role as a producer and a seller. As a producer, it purchases raw materials, machinery, equipment, etc and as a seller, it sells finished goods which are purchased by the consumers. Similarly, services and money are also traded among people. To carry out these transactions, there is the need of the market. In general sense, market refers to a particular place where commodities and services are traded. In economics, market refers to a mechanism by which buyers and sellers are brought together for the purchase and sale of the commodity.
According to P.A Samuelson,” a market is a mechanism by which buyer and seller interact to determine the price and quantity of a good or service. “
According to N.G.Mankiw,” a market is a group of buyers and sellers of a particular commodity or service. The buyers as a group determine the demand for the product and sellers as a group determines the supply of the product. “
A market can be local, regional ,national, international, competitive, noncompetitive ,organized or unorganized etc.
Features/characteristics of the market:
- Availability of commodity
There should be a commodity in the market which is being demanded and supplied.
- Availability of buyers and sellers
There must be buyers and sellers of the commodity in the market. Without buyers and sellers, there is no trading and no market.
There must be communication between buyer and seller in the market. Without interaction between buyer and seller, there is no transaction.
There must be a place or an area where buyers and sellers interact with each other. It may be local, national or global.
- Medium of exchange
There must be a medium of exchange in order to trade in a market. Such a medium may be money, cheques, swipe cards, and other near money items.