Why are rules and regulations needed in the market ? Explain with example.
Answers
Rules and regulations are required in the marketplace to protect the consumers against exploitation by the producers, sellers and service providers. they often indulge in unfair trade practices and provide false information about a particular service or product. Most of consumers are unaware about their rights and they are often deceived by the suppliers. So in the interest of the consumer, it is necessary to take action against suppliers and producers.
Answer:
Need for rules and regulations:
i. Individual consumers often find themselves in a weak position.
Whenever there is a complaint regarding a good or service that had
been bought, the seller tries to shift all the responsibility on to the
buyer.
ii. Sometimes traders indulge in unfair trade practices, such as when
shopkeepers weigh less than what they should.
iii. Markets do not work in a fair manner when producers are few and
powerful. A long battle had to be fought with court cases to make
cigarette manufacturing companies accept that their product could
cause cancer.
iv. Large companies with huge wealth, power and reach can manipulate
the market in various ways. At times false information is passed on
through the media and other sources to attract consumers.
v. Consumer is also exploited when buyers purchase in small amount
and are scattered. For example, a company for years sold powder milk
for babies all over the world as the most scientific product claiming
this to be better than mother’s milk. It took years of struggle before the
company was forced to accept that it had been making false claims.