Consider the following statements:
(A) A market is an institution which organises the free interaction of individuals pursuing their economic activities.
(B) The term ‘market’ as used in economics means the same as a marketplace.
(C) Buyers and sellers may interact at a village-chowk, at a super bazaar in a city, or over the internet.
(D) In a market system, goods come with a price which is mutually agreed upon by the buyers and sellers.
(E) The price of a good reflects, on an average, the producers’ valuation of the good.
Which of the above statements are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (C) and (D) only
In economics, a market is a set of arrangements for free exchange, wherever it happens. Exchange takes place at a price agreed by buyers and sellers.
(A) A market is an institution which organises the free interaction of individuals pursuing their economic activities. — Correct. This is how a market is defined.
(B) The term ‘market’ as used in economics means the same as a marketplace. — Incorrect. The market in economics has nothing as such to do with a marketplace.
(C) Buyers and sellers may interact at a village-chowk, at a super bazaar in a city, or over the internet. — Correct. Exchange can happen in many settings, including over the internet.
(D) In a market system, goods come with a price which is mutually agreed upon by the buyers and sellers. — Correct. Exchanges take place at a mutually agreed price.
(E) The price of a good reflects, on an average, the producers’ valuation of the good. — Incorrect. The price reflects society’s valuation, buyers included.
NCERT (2026-27): “1.3.2 The Market Economy … A market, as studied in economics, is an institution which organises the free interaction of individuals pursuing their respective economic activities. In other words, a market is a set of arrangements where economic agents can freely exchange their endowments or products with each other. It is important to note that the term ‘market’ as used in economics is quite different from the common sense understanding of a market. In particular, it has nothing as such to do with the marketplace as you might tend to think of. For buying and selling commodities, individuals may or may not meet each other in an actual physical location. Interaction between buyers and sellers can take place in a variety of situations such as a village-chowk or a super bazaar in a city, or alternatively, buyers and sellers can interact with each other through telephone or internet and conduct the exchange of commodities. The arrangements which allow people to buy and sell commodities freely are the defining features of a market.” “In a market system, all goods or services come with a price (which is mutually agreed upon by the buyers and sellers) at which the exchanges take place. The price reflects, on an average, the society’s valuation of the good or service in question. …” |