MARKET BASKET Meaning and
Definition
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A market basket refers to a representative collection of goods and services that are commonly purchased by consumers in a given market or geographical area. It consists of a selection of products that form the basis for the calculation of various economic indicators and statistics, such as inflation rates, consumer price index (CPI), and purchasing power.
The market basket typically includes a range of essential items such as food, beverages, clothing, housing, transportation, healthcare, education, and other goods and services that are representative of the average consumer's spending patterns. This assortment is carefully designed to reflect the overall consumption patterns of the population and the relative importance of different categories of goods and services in the economy.
The composition of a market basket is periodically reviewed and updated to ensure it remains relevant and accurately represents the changing consumption habits of consumers. Each item within the basket is assigned a weight based on its perceived importance in total consumer spending. This weightage helps to determine the overall price level and inflation rate for the given period, as changes in prices of items in the market basket are tracked over time.
By using a market basket as a representative sample, economists and policymakers can evaluate changes in the cost of living and measure the impact of inflation on consumers' purchasing power. It serves as a crucial tool for monitoring and analyzing economic trends, enabling policymakers to make informed decisions and assess the overall health and stability of the economy.
Etymology of MARKET BASKET
The etymology of the term "market basket" can be broken down as follows:1. Market: The word "market" originates from the Latin word "mercatus", meaning "to buy" or "to sell". It evolved through various languages and influences, including Old French, Old High German, and Middle Dutch before entering English around the 12th century. In its simplest form, a market refers to a place or setting where goods, commodities, or provisions are bought and sold.2. Basket: The word "basket" can be traced back to the Latin "bascauda", which referred to a large container made of wicker or interwoven twigs. It later passed into various Romance languages, including Old French ("basket") and Middle English ("baskat"), before settling into its current form in English. A basket typically denotes a container made of various materials, often woven, and used to carry or store items.
