Chapter 12 Understanding Markets Revision Notes Class 6 Social Science NCERT
NCERT Notes of Understanding Markets for Class 7 SST is available on this page of studyrankers website. This chapter is from NCERT Textbook for Class 7 Social Science named Exploring Society: India and Beyond Part I. This textbook is published by NCERT (National Council of Educational Research and Training). Class 7 Social Science Textbook published by NCERT is prescribed for CBSE students. Chapter 12 Understanding Markets Revision Notes is very helpful in understanding the chapter clearly and in easy manner. Students can also find NCERT Solutions for Understanding Markets on this website for their reference. It is very helpful for class 7 students in preparing for the examination. We have covered all the important points and topics of the Understanding Markets chapter of class 7 SST ncert textbook. Students can also find all the questions answers of Understanding Markets chapter which is in the textbook updated to latest pattern of cbse and ncert.
NCERT Notes for Chapter 12 Understanding Markets Class 7 Social Science
India has a diverse marketplace that caters to a wide range of goods and services, from vegetables and clothes to phones and tailoring.
- Before the invention of money, people used the barter system to exchange goods and services, such as trading crops or beads for other items. With the advent of money, markets became more efficient, facilitating easier transactions.
- Adam Smith, an 18th-century economist, argued that markets grow when people need goods and services they cannot produce themselves, leading to prosperity.
- In this chapter, we will explore how markets function, their role in society, and how they have evolved over time.
What is a Market?
A market is a place where people buy and sell goods and services, called bazaar, haat (Hindi), or mārukatté (Kannada).
- It can be physical (like a shop) or online (using apps or websites).
- Markets provide goods and services to individuals, households, and businesses.
- Example: Hampi Bazaar in the Vijayanagara Empire (16th century) was a thriving market with grains, silk, animals, jewels, and cloth, described by Portuguese travellers like Domingos Paes as “the best-provided city” and by Fernao Nuniz for its abundance.
Every market has:
- A buyer who wants to purchase.
- A seller who offers goods or services.
- A price, the amount agreed for the transaction (buying/selling).
- Buyers and sellers often negotiate or bargain to agree on a fair price.
Prices and Markets
Prices are set by how buyers and sellers interact in a market.
Example with guavas:
- If a seller sets the price at ₹80/kg, but buyers think it’s too high, they offer a lower price. The seller may refuse if it’s not profitable.
- They negotiate until they agree on a mutually agreeable price. If they don’t agree, no transaction happens.
Scenarios
- High Price: If the price is set too high, few buyers may purchase, prompting the seller to lower the price.
- Low Price: If the price is set too low, many buyers may purchase, but the seller might raise the price to earn more.
- Just Right Price: The price that balances what buyers can pay and what the seller needs to earn. This price is set over time, influenced by demand (how much buyers need) and supply (how much sellers offer)
- As sellers observe buyer behaviour, they can assess how much of a product to supply in the future to meet demand while ensuring fair prices.
Examples:
- Vegetables are cheaper at night in weekly markets because sellers want to clear stock before it spoils.
- Garment stores discount woollen clothes at winter’s end to sell leftover stock.
Markets around Us
Markets exist in many forms and places, serving different needs.
Here are the different type of markets around us
1. Physical markets:
- Buyers meet sellers in person to buy goods or services with money.
- Examples: weekly markets, haats (vendors with carts selling vegetables or handicrafts), local shops, street food vendors, and malls with many stores.
- Some services, like tailoring, need physical markets because they require in-person contact.
2. Online markets
- Buyers and sellers transact through apps or websites, even from far away.
- Goods like books, clothes, furniture, groceries, or electronics (TVs, phones) can be bought and delivered to your doorstep.
- Services like online classes are also available.
- Manufacturers buy components online for production.
- Payments are made online, making it convenient.
Pros and cons of Online Markets
- Physical: Buyers can see and touch goods, but it takes time to visit. Sellers meet customers but need a shop.
- Online: Convenient and offers more choices, but buyers can’t touch goods, and sellers face high competition.
Domestic and International Markets
Markets at broader stage can be classified into Domsetic and International markets. Here are the details of them:
1. Domestic markets
- Buying and selling happens within a country’s borders.
- Example: Paper for this textbook was bought from paper mills in India.
2. International markets
- Trade happens across countries through exports (selling goods to another country) or imports (buying goods from another country).
- India exports: software (North America), chemicals (South America), pharmaceuticals (Africa), machinery (Europe), petroleum (West Asia).
- India imports: aircraft (North America), copper ores (South America), diamonds (Africa), electrical equipment (Europe), crude petroleum (West Asia), vegetable oils (South East Asia).
- In 2024, India was the world’s largest importer of vegetable oils (palm, sunflower and soybean) from Malaysia, Indonesia, and Thailand.
Wholesale and Retail Markets
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| Wholesale Retail Markets |
1. Wholesale markets
- Wholesalers buy large quantities of goods from producers (e.g., grains, vegetables from farms) and store them in warehouses or cold storage for perishables.
- Goods are sold in mandis or wholesale markets (e.g., Khari Baoli for spices, Bengaluru flower market).
- Wholesale markets also exist for chemicals, electronics, construction materials, and automotive parts.
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| Supply of Raw Cotton to Surat |
2. Retail markets
- Retailers buy from wholesalers and sell smaller quantities to consumers for personal use.
- Examples: grocery stores, garment shops, salons, movie theatres, restaurants.
- Retailers make goods and services easily available to households.
Distributors:
- Help wholesalers reach retailers when distances or terrains are challenging, like middlemen in the AMUL milk story from Grade 6.
Online markets:
- Manufacturers send goods to aggregators (businesses running online apps/websites).
- Consumers buy through the app, and aggregators pack and deliver the goods.
Example: Surat textile market
- Asia’s oldest textile hub, with factories making cotton and synthetic textiles.
- Raw cotton comes from mandis in Maharashtra and Gujarat, processed into fabric or garments through weaving and dyeing.
- Wholesalers distribute to retailers across India and internationally, ensuring steady supply.
- Surat’s diamond industry and port/highway networks also boost trade.
Role of Markets in People’s Lives
Markets connect producers and consumers, providing goods and services people cannot make themselves. Without markets, essentials like rice, wheat, or cloth wouldn’t reach people, causing shortages.
- Example: Aakriti, an artist, struggles to find buyers for her paintings because art has fewer local buyers, unlike guavas. Artists can use online platforms or galleries to reach buyers.
- Markets build relationships: Families trust tailors, jewellers, or grocers for generations, sometimes settling accounts monthly. Ima Keithal in Manipur, run by 3000 women, sells vegetables, clothes, and crafts, providing income and uniting communities.
- Traditions: In South India, sellers give free haldi and kumkum with purchases as a sign of good wishes.
How Markets Benefit Society
- Markets respond to consumer needs, improving products and society.
- Example: When consumers demand energy-efficient refrigerators, producers make them, saving electricity and helping the environment.
- Markets encourage innovation and better products based on what people want.
Government’s Role in the Market
Markets work through the interaction of demand from buyers and supply from sellers. However, when this doesn't work well, the government steps in to ensure fair pricing and monitor the interaction between consumers and producers.
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| Label Behind Packet |
1. Controlling Prices for Protecting Buyers and Sellers
The government sets price limits:
- Maximum prices for essentials like lifesaving drugs to protect buyers.
- Minimum prices for crops like wheat or maize to ensure farmers don’t lose money.
- Minimum wages to ensure fair pay for workers.
Prices must balance: too low, producers stop making goods; too high, buyers can’t afford them.
Example: When onion supply drops, prices rise. The government may import onions or control prices to help consumers.
2. Ensuring Quality and Safety Standards
- The government checks that goods and services meet quality and safety standards.
- Example: For medicines, the government approves drugs and tests samples to ensure they are safe, protecting consumer health.
- It also monitors weights and measures of packaged goods to ensure correct quantities.
- Historical example: Kautilya’s Arthaśhāstra required traders to give extra ghee to buyers to account for losses in measuring, showing early consumer protection.
3. Mitigating the External Effects of Markets
- Markets can harm the environment, like factories polluting during production.
- The government makes rules to control these effects, e.g., regulating single-use plastics to reduce pollution and health risks.
4. Providing Public Goods
- Public goods like parks, roads, or policing don’t generate profit, so producers don’t provide them.
- The government provides these to ensure citizens’ welfare, as guaranteed by the Constitution.
- Too many rules can disrupt markets, so the government must balance regulation and freedom.
How Can Consumers Assess the Quality of Products and Services?
- Consumers need to check the quality of goods to make good buying choices.
- Example: Buying marbles for a competition, you’d check price, size, strength, and color to win.
- For products like gram flour, consumers look for quality signs on packages.
Other ways to assess quality:
- Word of mouth: Family or friends recommend trusted products.
- Online reviews: Feedback from other buyers helps decide online purchases.
What each of these labels mean?
Government certifications on products show they meet quality standards:
- FSSAI (Food Safety & Standards Authority of India): On food packets, it shows the food is tested and safe to eat.
- ISI Mark (Indian Standards Institution by Bureau of Indian Standards): On electrical appliances, tires, or paper, it ensures quality and safety.
- AGMARK (Agriculture Mark): On vegetables, fruits, pulses, or honey, it certifies quality for agricultural products.
- BEE Star Rating (Bureau of Energy Efficiency): On electronics like TVs or ACs, more stars mean less electricity use, saving money and helping the environment.
Important Points
- Markets enable buying and selling at a price set by demand and supply.
- Participants like manufacturers, wholesalers, distributors, and retailers ensure goods reach consumers.
- Markets connect people, promote traditions, and exchange ideas.
- The government regulates markets for fair prices, quality, safety, and environmental protection.
- Consumers assess quality using certifications (FSSAI, ISI, AGMARK, BEE) and reviews.
Difficult Words
- Needs: Things people must have to survive, like food or shelter.
- Wants: Things people desire but don’t need, like toys.
- Market: A place where people buy and sell goods and services.
- Trade: Buying, selling, or exchanging goods and services.
- Price: The amount paid for goods or services, agreed by buyer and seller.
- Transaction: The act of buying or selling something.
- Negotiate: Discussing to agree on a price or deal.
- Demand: The amount of goods or services buyers want at a price.
- Supply: The amount of goods or services sellers offer at a price.
- Physical market: A market where buyers and sellers meet in person.
- Online market: A market where transactions happen through apps or websites.
- Domestic market: Trade within a country’s borders.
- International market: Trade across countries.
- Export: Selling goods to another country.
- Import: Buying goods from another country.
- Wholesaler: A person buying large quantities from producers to sell to retailers.
- Retailer: A person selling small quantities to consumers.
- Distributor: A person supplying goods from wholesalers to retailers.
- Aggregator: A business selling goods online from multiple sellers.
- Cold storage: Warehouses keeping perishable goods fresh at low temperatures.
- Public goods: Services or items available to all, like roads or parks.
- Certification: A mark showing a product meets quality standards.
- FSSAI: Food Safety & Standards Authority of India, ensuring food safety.
- ISI Mark: A quality mark for appliances, tires, or paper.
- AGMARK: A quality mark for agricultural products.
- BEE Star Rating: A mark showing energy efficiency of electronics.