Chapter 12: Understanding Markets

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NCERT Questions and Activities (with Answers)

Q1. What are the main features of a market? Recall a recent visit to a market to purchase a product. What are the different features of a market that you observed during this visit?
Answer:
Features of a market:

1. Presence of buyers and sellers.

2. Exchange of goods/services at a mutually agreed price.

3. Negotiation or bargaining may take place.

4. Goods are available in different varieties and quantities.

5. Prices depend on demand and supply.

(Example: In a vegetable market, I observed bargaining, variety of sellers, competitive prices, and many buyers.)

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Q2. Remember the epigraph from a famous economist at the beginning of the chapter? Discuss its relevance in the context of the chapter you have read.
Answer:
Adam Smith’s quote means that markets arise because people cannot produce everything themselves. Markets connect people, bring goods and services together, and promote prosperity. The chapter shows that markets provide essentials, link buyers and sellers, and support society and culture.

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Q3. In the example of buying and selling of guavas, imagine that the seller is getting a good price, and is able to make a profit. He will try to get more guavas from farmers to be able to sell them at the same price and increase his earnings. What is the farmer likely to do in this kind of a situation? Do you think he will start thinking about the demand for guavas in the next season? What is likely to be his response?
Answer:
The farmer will see that guavas are in demand and will try to grow more guavas in the next season. He may expand cultivation or improve quality to earn more profit. Farmers do think about market demand before deciding what crops to grow.

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Q4. Match the following types of markets with their characteristics:

1. Physical market → Requires physical presence of buyers and sellers

2. Online market → Buyers and sellers meet virtually and can transact anytime

3. Domestic market → Lies within the boundaries of a nation

4. International market → Goods and services flow outside a nation’s boundaries

5. Wholesale market → Deals in bulk quantities

6. Retail market → Serves the final consumers with goods and services

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Q5. Prices are generally determined by the interaction between demand from buyers and supply by sellers. Can you think of products where prices are high despite lesser number of buyers demanding the product? What could be the reasons for that?
Answer:
Examples: gold, diamonds, luxury cars, branded clothes.
Reasons: scarcity of supply, high production costs, brand value, and exclusive demand by a small group of wealthy buyers.

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Q6. A family buys beans for ₹40/kg in a supermarket though the cart-seller offered them at ₹30/kg. Why did they do this?
Answer:
Because supermarkets provide clean packaging, quality assurance, and trust in weights. Non-price factors like hygiene, comfort, and brand reputation influence consumer choices along with price.

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Q7. Farmers often throw away tomatoes when harvest is large. Why? What role can wholesalers play?
Answer:
When supply is too high, prices fall so much that farmers cannot cover costs. Wholesalers can buy in bulk, store in cold storage, and supply to other regions. Government and cooperatives can help process tomatoes into ketchup, puree, or dried products to reduce waste and losses.

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Q8. Have you heard about/visited a school carnival or fair? How do students conduct selling and negotiation with buyers?
Answer:
Yes, in school carnivals students sell food, games, and handmade items. They fix prices or negotiate with buyers. They learn how markets work, including demand, pricing, and profits.

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Q9. Choose 5 products and check their labels for certification marks. Did you find some without logos? Why?
Answer:
Examples:

• Milk (FSSAI)

• Electric fan (ISI mark)

• Rice (AGMARK)

• Refrigerator (BEE star rating)

• Biscuit packet (FSSAI)

Some unbranded products lack certification because they are local, small-scale, or uncertified.

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Q10. You and your classmates have manufactured a soap bar. Design a label for its packaging. What should be mentioned?
Answer:
Label should mention:

• Brand name

• Ingredients

• Date of manufacture & expiry

• Weight/quantity

• MRP

• Certification logo (ISI/FSSAI equivalent)

• Manufacturer’s details

• Allergen warnings

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Extra Short Answer Questions (2–3 sentences)

1. What is a market?
   → A market is a place, physical or online, where buyers and sellers exchange goods or services at agreed prices.

2. What is demand?
   → The quantity of a product buyers are willing and able to buy at a particular price.

3. What is supply?
   → The quantity of a product sellers are willing to sell at a particular price.

4. What is meant by bargaining?
   → Bargaining is the negotiation between buyer and seller to settle on a mutually acceptable price.

5. What is the difference between wholesale and retail markets?
   → Wholesale markets deal in bulk sales to retailers, while retail markets sell in smaller quantities directly to consumers.

6. Give an example of an international market product.
   → India imports crude oil from West Asia and exports textiles to Europe.

7. What is the role of distributors?
   → They connect wholesalers to retailers, ensuring supply even in remote areas.

8. Name one famous women-run market in India.
   → Ima Keithal (Mother’s Market) in Manipur.

9. What does the FSSAI mark on food packets mean?
   → It means the food has been tested and certified safe by the Food Safety & Standards Authority of India.

10. What does the BEE star rating on appliances show?
    → It shows energy efficiency; more stars mean lower electricity use and savings.

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🔹 Extra Long Answer Questions (5–6 sentences)

Q1. Explain the role of government in markets.
→ The government regulates markets to ensure fairness and protect consumers. It sets minimum support prices for crops and maximum prices for essential medicines. It ensures quality standards through ISI, FSSAI, and AGMARK. It provides public goods like roads, parks, and policing. It also checks pollution and misuse of resources. Thus, it balances interests of buyers, sellers, and society.

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Q2. How do markets affect people’s lives beyond just buying and selling?
→ Markets also build relationships of trust between buyers and sellers, often lasting generations. They provide employment and income, like Ima Keithal in Manipur. They are places for cultural exchange, traditions, and festivals. Markets also influence lifestyle choices, like energy-efficient appliances. They are important socially as well as economically.

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Q3. Explain the chain of supply in a physical market with an example.
→ The supply chain begins with the producer or manufacturer, who sells to wholesalers in bulk. Wholesalers store goods in warehouses and sell to retailers. Retailers sell in smaller quantities to final consumers. For example, in the Surat textile market, cotton is processed into cloth, sold in wholesale, and then distributed to shops across India and abroad. This chain ensures goods reach consumers efficiently.