Question

Write about the types of market and its functions.

Answer 1

1. On the Basis of Geographic Location:

1. Local Markets: In such a market the buyers and sellers are limited to the local region or area.
2. Regional Markets: These markets cover a wider area than local markets like a district, or a cluster of few smaller states
3. National Market: This is when the demand for the goods is limited to one specific country. Or the government may not allow the trade of such goods outside national boundaries.
4. International Market: When the demand for the product is international and the goods are also traded internationally in bulk quantities, we call it as an international market.

2. On the Basis of Time:

1. Very Short Period Market: This is when the supply of the goods is fixed, and so it cannot be changed instantaneously. For example the market for flowers, vegetables. Fruits etc.
2. Short Period Market: The market is slightly longer than the previous one. Here the supply can be slightly adjusted. Example: The demand for fish, milk or egg,
3. Long Period Market: Here the supply can be changed easily by scaling production. So it can change according to the demand of the market.

3. On the Basis of Nature of Transaction

1. Spot Market: This is where spot transactions occur, that is the money is paid immediately. There is no system of credit.
2. Future Market: This is where the transactions are credit transactions. There is a promise to pay the consideration sometime in the future.

4. On the Basis of Regulation:

1. Regulated Market: In such a market there is some oversight by appropriate government authorities. For example, the stock market is a highly regulated market.
2. Unregulated Market: This is an absolutely free market. There is no oversight or regulation, the market forces decide everything.

5. On the basis of Nature of competition:

1. Monopoly:
   Monopoly refers to a market structure in which there is a single producer or seller that has a control on the entire market. This single seller deals in the products that have no close substitutes.
2. Monopolistic Competition:
   Monopolistic competition refers to a market situation in which there are a large number of buyers and sellers of products.