NCERT Class 7 Social Science Chapter 12 Understanding Markets

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NCERT Class 7 Social Science Chapter 12 Understanding Markets

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Understanding Markets

Chapter: 12

THEME – E: Economic Life Around Us

The Big Questions? 

1. What are markets and how do they function? 

Ans: A place where people buy and sell goods is called a market. It is also known as bazaar, haat (in Hindi). . Markets function through interactions between buyers and sellers, where goods and services are exchanged for money. Prices are determined based on demand and supply.

2. What is the role of markets in people’s lives? 

Ans: Markets play a crucial role in people’s lives by providing them with access to goods and services they need. Key concepts in markets are supply and demand, competition, pricing, and market efficiency. Supply and demand work together to set the balance of price and amount of goods and services sold.

3. What role does the government play in markets? 

Ans: The government plays a crucial role in such situations. It monitors the interaction between consumers and producers, and fair determination of price.

(i) Controlling prices for protecting buyers and sellers: The government controls the prices of certain goods. For example, it sets the maximum price that the seller can charge. Several essential goods and services, such as lifesaving drugs, have an upper limit on their prices. Another instance is where the government sets the minimum price at which essential agricultural products like wheat, paddy and maize can be sold.

(ii) Ensuring quality and safety standards: The government has a role in ensuring the welfare of consumers and protecting them from unfair practices. The government ensures that manufacturers follow the required quality and safety standards while producing goods and delivering services.

4. How can consumers assess the quality of goods and services they purchase?

Ans: The consumer decision-making process involves five basic steps: problem recognition, information search, alternatives evaluation, purchase decision, and post-purchase evaluation. To assess the quality of goods and services, consumers mainly rely on the information search and alternatives evaluation stages. During these steps, they compare products, check for quality certification marks like ISI, AGMARK, or Hallmark, read labels for important details, look at reviews (especially online), and consider feedback from other users. This helps them make informed choices before buying and also evaluate the product or service after purchase to ensure it meets their expectations.

Questions and Activities

1. 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? 

Ans: The the main features of a market are: 

(i) Goods and Services: A market is where goods and services are bought and sold to satisfy the needs of consumers.

(ii) Buyers and Sellers: There are always buyers looking to purchase and sellers offering goods or services.

(iii) Competition: Different sellers compete to offer the best price or quality to attract customers.

(iv) Price Determination: Prices are decided by the interaction of demand and supply, with factors such as quality, availability, and competition affecting them.

(v) Transaction and Exchange: Buyers and sellers engage in transactions where goods or services are exchanged for money.

(vi) Location: Markets can be physical, like a local bazaar or supermarket, or virtual, like online shopping platforms.

During my recent visit to a local market, I noticed several key features. There was a wide range of goods on display, from fresh produce to household items. Sellers actively interacted with buyers, offering product details and discounts. I observed that prices varied for similar items, reflecting competition among vendors. The market was crowded, indicating high demand, and the prices often depended on the quality or freshness of the goods. The process from selection to payment was smooth, and many stores had clear price tags, making it easy for buyers to compare prices.

2. 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. 

Ans: Students, do it yourself.

3. 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? 

Ans: If the seller is making a good profit from selling guavas, the farmer will likely grow more guavas to sell and earn a similar profit. The farmer might also think about the demand for guavas in the next season, hoping that the good prices will continue. However, if many farmers decide to grow more guavas, there could be too many guavas in the market next season, which could lower the price.

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

S.No.	Markets	Criteria
1	Physical market	Goods and services flow outside the nation’s boundaries
2	Online market	Deals in bulk quantities
3	Domestic market	Serves the final consumers with goods and services
4	International market	Requires physical presence of buyers and seller
5	Wholesale market	Buyers and sellers meet virtually and can transact at any time
6	Retail market	Lies within the boundaries of a nation

Ans: 

S.No.	Markets	Criteria
1	Physical market	Requires physical presence of buyers and sellers
2	Online market	Buyers and sellers meet virtually and can transact at any time
3	Domestic market	Lies within the boundaries of a nation
4	International market	Goods and services flow outside the nation’s boundaries
5	Wholesale market	Deals in bulk quantities
6	Retail market	Serves the final consumers with goods and services

5. 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? 

Ans: Yes, some products maintain high prices even with fewer buyers. Examples: Luxury goods like designer handbags, high-end watches, or luxury cars are priced high despite limited demand because they are considered exclusive and prestigious. Their high price is driven by brand value, quality, and scarcity, which adds to their appeal. Similarly, medicines or treatments for rare diseases may have a smaller customer base, but their high prices are due to their specialized nature, research and development costs, and limited supply. Artwork or antiques, on the other hand, are valuable because of their rarity, cultural significance, and historical value. Even though fewer buyers are interested, their uniqueness makes them highly sought after by collectors, keeping prices high.

6. Look at the real life situation that a retail seller of vegetables encountered: A family came to shop for vegetables. The price of beans that the seller on the cart was offering was ₹30 / kg. The lady started to bargain with the seller to bring the price down to ₹25 / kg. The seller protested and refused to sell at that price saying he would make a loss at that price. The lady walks away. The family then goes to a super bazaar nearby. They buy vegetables in the super bazaar where they pay ₹40 / kg for the beans that is neatly packed in a plastic bag. What are the reasons that the family does this? Are there factors that affect buying and selling which are not directly connected to price?

Ans: In the given situation, the family decided to buy beans at ₹40/kg from the super bazaar instead of purchasing them at ₹30/kg from the local seller after bargaining. The reasons for this could be:

(i) Quality and Packaging: The beans in the super bazaar were neatly packed in a plastic bag, which may have suggested they were fresher or cleaner, offering better perceived value despite the higher price.

(ii) Convenience: Shopping at the super bazaar may have been more convenient for the family. They didn’t have to bargain and could quickly pick up the vegetables from an organized, hassle-free environment.

(iii) Time-Saving: The family might have preferred to avoid the bargaining process, which takes time and effort, and chose the super bazaar for a smoother shopping experience.

Factors affecting buying and selling that are not directly connected to price:

(i) Quality and Presentation: Neatly packed goods can create a perception of higher quality, influencing buying decisions.

(ii) Convenience: Location, ease of shopping, and the time saved in not having to bargain can make a store more attractive.

(iii) Customer Experience: A clean, organized environment or friendly service can make customers willing to pay a little extra.

7. There are some districts in India that are famous for growing tomatoes. However, during some seasons, the situation is not good for farmers. With a large quantity of harvest, there are reports of farmers throwing away their produce and all their hard work going to waste. Why do you think farmers do this? What role can wholesalers play in such situations? What are the possible ways of ensuring that the tomatoes are not wasted, and the farmers are also not at a loss? 

Ans: In some districts in India, farmers grow a lot of tomatoes, but sometimes they end up throwing them away. This happens when there is too much produce and not enough demand. When there’s a lot of tomatoes, the price drops, and farmers can’t sell them for a good price. If the price is too low, selling the tomatoes won’t cover the costs, so the farmers end up wasting their hard work. Poor storage and transportation are also reasons tomatoes spoil quickly.

Wholesalers can help by buying large quantities of tomatoes from farmers at a fair price and selling them in other markets where there’s more demand. To prevent waste, farmers can use better storage, like cold storage, to keep tomatoes fresh longer. They can also turn extra tomatoes into products like ketchup or sauce. The government can also help by setting a minimum price to ensure farmers get a fair amount for their produce.

8. Have you heard about or visited a school carnival / fair organized by your school or any other school? Discuss with your friends and teachers about the kind of activities organized by students there. How do they conduct selling and negotiation with the buyers? 

Ans: Yes, I have attended school carnivals or fairs organized by schools. These events are typically filled with various student-led activities and stalls. 

Here are some common activities organized by students:

(i) Food Stalls: Students set up stalls selling snacks, beverages, and sometimes homemade dishes. These stalls may have food like sandwiches, ice cream, popcorn, or fruit juices.

(ii) Game Stalls: Students organize fun games like ring toss, dart games, or quizzes, where participants can win prizes.

(iii) Art and Craft Stalls: Students display handmade crafts like paintings, jewelry, or decorative items that they sell.

(iv) Talent Shows: Students perform in talent shows, including singing, dancing, and skits, often as part of the entertainment.

Selling and Negotiation:

(i) Price Setting: Students set prices for their products or activities in advance, keeping in mind the audience’s budget. For example, food items may be priced affordably to attract more buyers.

(ii) Negotiation: While selling, students may engage in friendly negotiation with buyers. For example, if someone asks for a discount, the seller might offer a small reduction, especially if they want to clear stock or make the sale more attractive.

(iii) Selling Tactics: Students often try to make their products appealing by promoting them with attractive signage or offering free samples. In food stalls, they may even offer bundle deals, like “Buy one, get one free.”

9. Choose any 5 products and check out the label with the certification signs discussed in the chapter. Did you find products that did not have a logo? Why do you think this is so? 

Ans: Products and Certification Logos:

(i) Milk: Certified with FSSAI (Food Safety and Standards Authority of India).

(ii) Organic Food: Certified with an “Organic” logo.

(iii) Cosmetics: “Cruelty-Free” logo, ensuring no animal testing.

(iv) Packaged Snacks: FSSAI logo and a “Best Before” date.

(v) Clothing: “Fair Trade” or “OEKO-TEX” certification for eco-friendliness.

Yes, some local or homemade products, such as homemade jams or small-scale local products, often don’t have certification logos.

Smaller producers often cannot afford the costs associated with obtaining certification, making it a significant barrier. Additionally, some products may not fall under regulated categories that mandate certification, leading to their absence on labels. Local vendors or small manufacturers, especially those operating on a small scale, might lack the resources or infrastructure required to apply for certification. Furthermore, smaller brands might not be fully aware of the importance or benefits of certification, which could result in the absence of such logos on their products. These factors collectively contribute to why certain products may lack certification logos.

10. You and your classmates have manufactured a soap bar. Design a label for its packaging. What in your opinion should be mentioned on the label for the consumer to know the product better?

Ans: For the soap bar label, the following details should be included:

Product Name: A catchy name like “Herbal Fresh Soap.”

Ingredients: List key ingredients such as glycerin, essential oils, etc.

Usage Instructions: How to use the soap.

Weight: Net weight (e.g., 100g).

Manufacturing & Expiry Date: The production and expiry dates.

Certifications/Quality Marks: Any relevant certifications (e.g., “Cruelty-Free”).

Brand Information: Manufacturer’s name and contact.

Benefits: Highlight the soap’s benefits (e.g., moisturizes skin).

Storage Instructions: How to store (e.g., keep in a dry place).