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CMA Foundation · Fundamentals of Business Economics and Management · Forms of Market

A Surat textile trader sells sarees to buyers in Chennai through a website and takes orders by phone, never meeting them. According to the economic concept of a market, this situation shows that:

A market exists here because buyers and sellers are in contact through the website and phone, which is enough in economics. A market is defined by dealings and price formation, not by a common physical location where the parties meet.

  1. ANo market exists because buyers and sellers do not meet physically
  2. BA market exists because contact between buyers and sellers is possible without a common physical locationCorrect
  3. CA market exists only if the trader has a shop in Chennai
  4. DA market exists only if the price is fixed by the government

Explanation

Economists define a market by the contact between buyers and sellers, which can be through phone, internet or agents. Physical meeting is unnecessary. Hence the first option is wrong, and shop presence or government price fixing is not a condition.

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