MARKET AND MARKET STRUCTURES
The father of economics Adam Smith in his book ‘The Theory of Moral Sentiments’ (1759), wrote about the main characteristics of human beings. According to him a human being is very selfish or posses self love as well as there exits an invisible hand. The concept of self-love ill human being is one of the most important factor in “the value theory” as well as in the development of market. “A human being weight between what he pays and what he recidivism “in return” is one of the basic characteristic of human being. Generally a human being carries out economic activities till a point where he thinks that what I am paying in equal to what Iam receiving. Human being willingly trade or carry out exchange till he feels that what Iam giving is less and what I am receiving is more, once he realises that what Iam giving is equal to what I am receiving, he stops,further trade. This is one of the basic philosophy Y d of ( I) Consumers, and the same thing can in Marshall words can be referred as consumer’s surplus, on the other hand (2) Producer the same can be referred as producer surplus-Both the concept is based on human selfish motives of maximizing returns in terms of their efforts (or money). did demand curve is derived from the consumers behavior in relation to price. A consumer (demand curve) is interested in paying least and want more in return at the point of price he feels that what he is giving is equal to what he is receiving. On the . other hand a seller or producer (supply curve) is interested in getting the maximum price by giving less and less, at point ‘P’ he feels that what I am giving is equal to what I am receiving Pncc i~ determined at a place where ‘dd’ and ‘ss’ is quad. the concept referred as ‘market’. On the bd.,i~of this ‘market’ the whole free enterprise or capitalistic economy is based.
Market plays important role in determining the shape, size and extent of the economy of a country. In value theory the.
Ill Classical value theory is based an supply side concept (cost of production of a good). (/J) Neoclassical, is based on demand side concept
(utility of a good) and II” 1 Modern-economic theorists lakes into account both the supply side and demand side economics, thus is nothing but the concern of market. (In other words demand and supply determines price)