question_answer 3)

Explain how a chain of markets is formed? What purpose does it serve?  

Answer:

(i) A chain of markets is formed starting from wholesale markets to retail shop owners who sell directly to the consumers. In between wholesale markets and retailers there are medium and big traders. For example, a hawker or retailer purchases plastic items from a wholesale-trader in the town. The town wholesaler, in turn, buys from a bigger wholesale trader in the city. The city wholesale trader buys a large quantity of plastic items directly from the factory and stores them in their godowns. Thus, a chain of market is formed. (ii) A chain of market serves the purpose of producer and consumers. Because neither a producer can sell a small quantity of goods to an individual consumer nor an individual consumer can buy large quantity of goods from producers. So, wholesale traders, retailers, etc. are required to link the producers and consumers.