A market is an organization whereby buyers and sellers of goods are kept in close touch with each other.
The market is a comprehensive area where buyers and sellers are scattered and are in close touch with one another and the price of commodity trends are identical in that area.
Buyers and sellers are scattered and they are in contact with one another through means of communication like letters, agents, brokers, telegraphs, newspapers, etc.
Any area out of which buyers and sellers are in such close touch with one another that the prices obtainable in one part of the market affect the prices paid in other parts is called a market.
A market means a place where there are many buyers and sellers of different products that are actively engaged in buying and selling acts.
But in economics, the market is a comprehensive term and there is no particular place where the buyers and sellers are physically present.
Features of the Market Economy
The following are the salient features of a market economy:
1. One Area
The market does not mean that the buyers and sellers of a commodity are physically present but the market is one area or region in which buyers and sellers of the commodity are scattered they are enclosed in touch with one another through different means of communication.
2. Buyers and Sellers
Exchange presupposes at least one buyer and seller of a commodity.
Buyers and sellers are a must for a market. Transactions take place between sellers and buyers but their physical presence is not necessary.
They may have contact with different types of communication.
3. One Commodity
For the existence of a market, they should be at least.
One commodity like cloth, wheat, vegetables, sugar, etc., and the market is termed as cloth Market, wheat market, vegetable market, etc.
4. Perfect Competition
When the price of a commodity will be only when there is perfect competition in the market.
A market must possess the characteristic of perfect competition wherein buyers and sellers are free to enter the market.
5. One Price
There is perfect competition between buyers and sellers.
It requires that there should be a single price prevailing in the market.
Economists understand the term market, not any particular marketplace in which things are bought and sold but the whole of any region in which buyers and sellers are in such free intercourse with one another that the prices of the same goods tend to equality easily and quickly.
Thus, The market area should have one price only.