Over the years influenced byeconomic studies formed trade relations. The idea of freedom of speech and actions that would not violate the rights of other people dominates in the modern world. This principle creates signs of a market economy. Previously, in many countries there was a command-administrative system in which trade was under tight control, but it did not pass the test of time and underwent fundamental changes.
The main signs of a market economy
Today’s market economy exists in manycountries. Its main feature is the self-regulation of the quantity of goods produced with the requests of customers. Freedom on the part of producers is ensured by the presence of private property, namely the regulatory framework, which allows, if there is finance for start-up capital, to engage in any available activity. At the same time, buyers can purchase goods and services within their own funds, thereby satisfying their needs. In a free market environment, entrepreneurs are interested in the qualitative result of their type of activity for profit, which creates mutually beneficial conditions for producers and consumers. The principle of free competition is governing, it is constantly subject to
Pricing in a market economy
Signs of a market economy are always manifested in the formation of prices, which is influenced by the interaction of factors of supply and demand. However, it performs the following functions:
- The distribution of income that affects purchasing power.
- Balancing supply and demand indicators.
- Regulates the conditions of business.
- Informs both the buyer and the seller about the state of the market, which primarily manifests itself through a shortage or surplus of goods.
- Provides profits to entrepreneurs, which stimulates them to productive activities.
All these functions are manifested in the circulation of naturalresources that turn into products for buyers. The most important feature of a market economy is freedom in production and consumption, which provides mutually beneficial conditions and creates a favorable environment for the realization of the interests of each individual.