essence of a market economy
market economy - a set of economic relations where the defining institution and regulator of economic processes is the market.In such a system, market-based mechanisms that respond to supply and demand determine the volume of production, distribution structure and rate of consumption of goods and services.On the one hand, it is clear and simple.However, as we know, any concepts and processes have their pros and cons.So here.It is worth a closer look at the features, advantages and disadvantages of the market economy.
market implies an absolute advantage and private property to the state.And if we consider the pros and cons of a market economy, it should be considered a positive aspect of it, as an entrepreneur, possessing this property will be possible to use it effectively in order to maximize profit margins.There is no "common" property, which, as history shows, is often used inefficiently.
price for products
existence of equilibri
Competition and economic freedom
Talking about the pros and cons of a market economy, it is necessary to know that in such an economy, there is a high level of economic freedom.That's good, because the manufacturer decides what goods, how much, from what and for whom to produce, so that these activities brought him the maximum profit.Competition among manufacturers and retailers, in turn, causes them to make their product more attractive to customers and provides the right to choose.At the same time, the market economy is often characterized by the absence of legislation regulating certain aspects of it, which contributes to the emergence of low-quality goods sold under the guise of quality, as well as the appearance of certain types of fraud.
should be noted that the planned and command economies also have their pros and cons.Market economy in its pure form does not exist anywhere else.So, today, every state, leading its economy at the macro level, trying as efficiently as possible to take into account all the positive and negative aspects of industrial and commercial processes in order to improve their economic situation and accelerate economic growth.