Solution:

Classification of Market:

(1) based on area or region:

• The economists have classified the market based on area or region which further can be summarized as under.

(i) Local Market

(ii) Regional or Provincial Market

(iii) National Market

(iv) International Market

(i) Local Market:

• If the buyers and sellers of a certain commodity are limited to a certain area or region, then it is called a local market. The perishable goods and low price goods have their local market like milk, ghee, hand-made fans, basket, cots, etc.

(ii) Regional or Provincial Market:

• If the buyers and sellers of a commodity are confined to a certain the region, say a province like Rajasthan or Haryana, then it is known as a regional or provincial market. The area of the regional market is greater than that of the local market e.g. the demand for Red Bangles in Rajasthan or the demand for Lahara in Rajasthan.

(iii) National Market:

• When the buyers and sellers are not confined to state boundaries but are spread throughout the country e.g., the market of sarees and dhotis or Gandhian caps or Nehru cut jackets, etc. have a national market.

• These are demanded throughout the nation. Hence they come under the purview of the national market.

(iv) International Market:

• When the buyers and sellers are spread across the geographical the boundary of a nation and the demand for such product is a worldwide or universal demand then its market is known as an international market e.g. market for gold and silver.

(2) based on time:

• Based on the time the economist has classified the market as under:

(i) Very short period Market.

(ii) Short period Market.

(iii) Long-period Market.

(iv) Very long period Market.

(i) Very short period Market:

• This market can further be classified into Daily Market or Weekly market.

• A very short period market is that market that takes part in the transactions for a very short period say a few hours a day or so. In a very short period, the supply of the product cannot be increased e.g. of milk. Here the demand determines the price.

• In a very short period of market generally, perishable commodities are exchanged. Daily Market- The market for perishable commodities comes under the daily market e.g. milk and vegetables.

• Weekly Market- Sometimes a market operates on any specific day of the week.

• It is generally found in those areas in which the main market has its closed day for the week, say Sunday market, or Tuesday market, or whatever the case may be according to the closing day of the main market.

(ii) Short period Market:

• Its period is greater than that of the previous one in which the supply of the product can be increased but we cannot make any change in the production plant according to the changing demand.

• In a short period also the demand side plays a major role in determining the price as a change in the plant and machinery is not possible from the point of view of production.

(iii) Long Period Market:

• It is such a market in which we can make necessary changes in the plant and machinery as well to increase the supply of the product according to its demand.

• The supply of the product plays a vital role in price determination resulting in a normal price for the product in such a market.

(iv) Very long period Market:

• There can be an enormous change in the supply of the product in a very long period market. New techniques of production, innovations and the new models of products can be produced because of a very long period.

• And in very long periods the demand also increases because of changes in population, habits, customs, fashions, etc.

(3) based on Functions:

• Based on functions the markets can be classified as under:

(i) Mixed or general Market.

(ii) Specialized Market.

(iii) Marketing by samples.

(iv) Marketing by grading.

(i) Mixed or general Market:

• When different types of commodities are transacted simultaneously in a market then it is known as a mixed or general market e.g. Chandni Chowk market in Delhi.

(ii) Specialized Market:

• When only one product or any of the special products is transacted in a market then it is known as a specialized market. In such a market, a particular thing is traded with its different brand names of possibly different kinds, e.g. bathing soap is bought and sold in the soap market could be Lux, Liril, Hamam, Rexona, Lifebuoy, etc.

(iii) Marketing by Samples:

• In such a market, the firms need not show the whole of their product. They only send samples through their agents or they may themselves show the samples of their product, e.g. in case of wool, cloth, paints, etc.

(iv) Marketing by Grading:

• The product is first graded according to its quality and then put forth for selling is known as marketing by grading e.g. in an Agricultural product market the product is graded accordingly and then sold. It is known as Marketing by grading.

(4) based on the nature of the commodity:

• The market can also be classified based on the nature of the commodity.

(i) Product Market.

(ii) Stock Market.

(iii) Bullion Market.

(i) Product Market:

• The production goods are exchanged in these markets e.g. Agriculture product is bought and sold in the Agriculture produce market.

(ii) Stock Market:

• A stock market is a market where stock and shares, bonds, securities, debentures, etc. are bought and sold. Bulls and Bears do transactions in the stock market as per their market reading.

(iii) Bullion Market:

• This is such a market in which Metallic trading exists e.g. the goods like silver and gold are better known as Bullion are traded and transacted.

(5) based on Legality:

• On this basis the market can be sub-divided as under:

(i) Legal or fair Market.

(ii) Illegal Market.

(i) Legal and Fair Market:

• When the goods are transacted in a market under certain norms and rules, the market is known as a legal market which also has a legal sanctity behind it issued by the legal authorities in a country. Here every consumer gets commodities at fair prices. These markets are also known as Fair Market.

(ii) Illegal Market:

• When the transaction of certain commodities is taking place in more than or less then the quantity prescribed by the legal authorities in operation say a government and then it is termed as illegal trade. The Hong Kong Market is an illegal market at the International level. Generally, it is also termed, Chord Market.