Notes Chapter 12 Understanding Markets Class 7 Social Science

Introduction

• Quote by Adam Smith: “Prosperity emanates from the market that develops when people need goods and services that they can’t create themselves.”
• This means markets help people get things they need but cannot make on their own.

1. What is a Market?

• Definition: A market is a place where people buy and sell goods and services. It can be called a bazaar, haat (Hindi), or mārukatté (Kannada).
• Examples: Vegetable markets, clothing stores, online shopping websites.

Types of Markets:

• Physical Markets: Where buyers and sellers meet in person (e.g., weekly haats, malls).
• Online Markets: Where buyers and sellers transact through apps or websites (e.g., Amazon, Flipkart).

Purpose of Markets:

• Help people get needs (essential for survival, like food, water, shelter) and wants (non-essential desires, like toys or gadgets).
• Connect people, traditions, and ideas.

Example: Hampi Bazaar (16th Century, Karnataka)

• A famous market during the Vijayanagara Empire.
• Sold grains, milk, oil, silk, animals, jewels, rubies, diamonds, and cotton clothes.
• Described as “the best-provided city in the world” by Portuguese traveler Domingos Paes.
• Activity: Imagine how Hampi Bazaar looked. Discuss old markets in your state with family.

2. How Do Markets Function?

Key Features of a Market:

• Buyers: People who want to buy goods or services.
• Sellers: People who sell goods or services.
• Price: The amount of money agreed upon for the transaction.
• Negotiation: Buyers and sellers discuss to reach a fair price.

How Prices Are Set:

Prices depend on demand (how much buyers want) and supply (how much sellers offer).

Example: Selling guavas:

• High Price (₹80/kg): Buyers may not buy, so no sale happens.
• Low Price (₹20/kg): Seller may lose money, but many buyers purchase.
• Just Right Price (₹40/kg): Both buyer and seller are happy, and the sale happens.
• Over time, sellers learn how much to supply based on buyer demand to set a fair price.

Activity:

• Create a skit where you act as a buyer and seller of guavas, discussing the price.
• Think: Why is negotiation less common in some markets (e.g., supermarkets with fixed prices)?

3. Types of Markets

A. Physical and Online Markets

Physical Markets:

• Buyers and sellers meet face-to-face.
• Examples: Weekly haats, local shops, malls, street food vendors.

Online Markets:

• Buyers and sellers transact through websites or apps.
• Goods (books, clothes, electronics) and services (online classes) are delivered to your doorstep.

Pros and Cons:

• Pros of Online: Convenient, wide variety, home delivery.
• Cons of Online: Cannot see/touch products, delivery delays.
• Pros of Physical: Can check quality, instant purchase.
• Cons of Physical: Travel required, limited variety.

Some services (e.g., tailoring, haircuts) need physical markets because they require in-person contact.

B. Domestic and International Markets

Domestic Markets:

• Goods and services are bought and sold within a country.
• Example: Paper for this book was bought from Indian paper mills.

International Markets:

• Goods are traded across countries through exports (selling to other countries) or imports (buying from other countries).
• Example: India exports software to North America and imports palm oil from Malaysia.

India’s Exports and Imports (Fig. 12.10):

Exports:

• North America: Software services.
• South America: Chemical products.
• Africa: Pharmaceuticals.
• Europe: Machinery.
• West Asia: Refined petroleum.

Imports:

• North America: Aircraft parts.
• South America: Mineral ores (e.g., copper).
• Africa: Diamonds.
• Europe: Electrical equipment.
• West Asia: Crude oil, fertilizers.
• South East Asia: Vegetable oils (e.g., palm oil from Malaysia).

Fun Fact: India is the world’s largest importer of vegetable oils (palm, sunflower, soybean) in 2024.

C. Wholesale and Retail Markets

Wholesale Markets:

• Wholesalers buy large quantities from producers (e.g., farmers, factories) and store them in godowns or cold storage.
• They sell to retailers or other businesses.
• Examples: Grain mandis, Khari Baoli spice market (Delhi), flower markets.

Retail Markets:

• Retailers buy from wholesalers and sell smaller quantities to consumers.
• Examples: Grocery stores, salons, restaurants, garment shops.

Distributors:

• Help wholesalers supply goods to retailers in faraway places.
• Example: Middlemen in the AMUL milk story (Grade 6).

Aggregators (Online Markets):

Businesses like Amazon store goods in warehouses and deliver to online buyers.

Example: Surat Textile Market (Gujarat)

Asia’s oldest textile market, famous for cotton and synthetic fabrics.

Process:

• Raw cotton comes from mandis in Maharashtra and Gujarat.
• Factories weave, dye, and make finished products (sarees, garments).
• Wholesalers sell to retailers across India and abroad.
• Surat is also the world’s largest diamond industry hub.

Activity: Trace the supply chain of a product (e.g., a shirt) from producer to consumer using a flowchart.

4. Role of Markets in People’s Lives

Economic Role:

• Markets help people get goods and services they cannot produce (e.g., farmers sell vegetables, factories sell clothes).
• They connect producers (who make goods) and consumers (who buy goods).

Social Role:

• Markets bring people together, creating relationships and traditions.
• Example: Families trust the same tailor, jeweller, or grocer for years.
• In South India, haldi and kumkum sellers give small free quantities as a gesture of goodwill.

Example: Ima Keithal (Mother’s Market), Imphal, Manipur

• Run by 3,000 women who sell vegetables, clothes, handicrafts, and local produce.
• Provides jobs and income to families.
• A cultural hub where people from different communities share ideas and traditions.

Think About It:

• What would happen without markets? (e.g., No rice, wheat, or clothes available.)
• Example: Aakriti, an artist, struggles to find buyers for her paintings because art has fewer local buyers.
• Solution: She can sell online, at art fairs, or through galleries.

Activity:

• Describe a tradition in your community (e.g., free haldi-kumkum) as a drawing or paragraph.

5. Government’s Role in Markets

The government ensures markets work fairly and protects buyers and sellers.

A. Controlling Prices

• Sets maximum prices for essential goods (e.g., lifesaving drugs) to protect buyers.
• Sets minimum prices for crops (e.g., wheat, paddy) to protect farmers.
• Sets minimum wages to ensure fair pay for workers.
• Challenge: Prices must balance so producers are motivated, and consumers can afford goods.

Activity:

• When onion supply decreases, prices rise. What should the government do? (e.g., Import onions or control prices.)

B. Ensuring Quality and Safety

• Government agencies check if goods meet quality standards.
• Example: Testing medicines to ensure they are safe.
• Monitors weights and measures of packaged goods (e.g., 1 kg flour is actually 1 kg).

C. Controlling Negative Effects

• Regulates industries that harm the environment (e.g., banning single-use plastics).
• Ensures factories follow pollution control rules.

D. Providing Public Goods

• Goods and services that don’t make a profit but are needed (e.g., public parks, roads, police).
• The government provides these for everyone’s benefit.

Think About It:

• Where else does the government help markets? (e.g., Subsidies for farmers.)
• Are there areas where government rules are too strict? Discuss with family.

Historical Example: Kautilya’s Arthashastra (ancient India) had rules to protect buyers, like giving extra ghee to account for spillage.

6. How Consumers Assess Quality

Consumers need to check the quality of goods and services before buying.

A. Certification Marks

FSSAI (Food Safety and Standards Authority of India):

• Found on food packets.
• Ensures food is safe to eat.

ISI Mark (Bureau of Indian Standards):

• Found on electrical appliances, tires, paper.
• Ensures product safety and quality.

AGMARK:

• For agricultural products (e.g., vegetables, pulses, honey).
• Ensures quality.

BEE Star Rating (Bureau of Energy Efficiency):

• Found on electronics (e.g., TVs, ACs).
• More stars = less electricity used = lower bills and eco-friendly.

Activity:

• Check BEE Star ratings on electronics at home and list them in order of energy efficiency.

B. Other Ways to Check Quality

• Reputation: Buying based on recommendations from family or friends.
• Online Reviews: Reading feedback from other buyers on shopping apps.
• Personal Inspection: Checking qualities like size, strength, or color (e.g., marbles for a competition).

Example: When buying gram flour:

• Check the packet for FSSAI logo, net quantity, manufacturing date, best-before date, ingredients, and nutrition facts.