What is a Market?

Learn about Markets with Harry Potter

Case Breakdown: Movie Harry Potter

The scene that you just saw shows how Harry (played by Daniel Radcliff) is brought by Hagrid to Diagon Alley. Harry is admiring this market and is very amazed. He can see owls, brooms, wands etc. are being sold in the market.

In this episode, Learning Perspectives will explore the meaning of a market and why is it important.

What is a Market?

Market is a place where goods can be exchanged for a price. It helps the buyer and the seller to connect with each other. A need of one person can be satisfied by the other. Markets can be retail outlets or virtual online sellers. Other types of market include financial markets, auction and black market.

Market also approves prices of the goods and services. These rates are derived from demand and supply of goods. A buyer creates demand while a seller generates supply. Markets tend to find an equilibrium in between this demand and supply. Size of the market is determined by the number of buyers and sellers in that particular market.

Market place is generally where transactions take place. These happen at a retail shop, small business houses, or a wholesale market. These markets can also be accessed virtually on Amazon, Flipkart, Myntra etc. In an online world, buyers and suppliers meet virtually not physically.

Types of Markets:

Markets are of varied types. This depends on what kinds of products are sold, customer type, legal or illegal in nature etc.

Financial Markets:

This is a market where securities, currencies, financial instruments are traded. Shares, bonds, liquid assets are some of the terms that are associated with the financial market. Credit market, money market, Forex market, debt market and the capital markets are the financial markets in India.

Auction Market:

Auction market is a place where potential buyers and sellers meet. Buyers who bid for the product, and the highest price wins the product. There is auction for illiquid securities on the NSE or the National Stock exchange. Periodic call auction was introduced by SEBI or the Securities exchange Board of India in 2013.

Black Market:

Black market is an illegal market. It includes trading of illicit drugs, weapons, medicines, currency etc. It also includes human trafficking. This unrecorded or parallel economy that is created by undertaking such activities leads to loss of money. During this process tax gaps are created.

Market size of the market is determined by the number of buyer and seller. Understanding the market size of the product launch is crucial for any company. Total money in the market is also a factor that determines the market size.

Written by: Ms. Gitika Chandra

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