Answer to Question #267608 in Economics for Nalyn

Question

Describe a market using an example.

Answer 1

The market is a system of economic relations between the seller and the buyer, which allows the exchange of the necessary resources. The concept of the market is inextricably linked with goods since the product is its main unit. Due to the division of labor, people have to exchange products with each other, because the market is what arises from the limited human resources. When one person cannot independently produce everything he needs, he has to exchange goods - this gives rise to a market.

Market signs

Each type of market targets different products. Markets exploit material objects, mental costs, and intellectual labors. They have invariable features by which they function:

Unregulated demand. The consumer decides how many goods and services he needs.

Unregulated offer. The manufacturer decides how much to produce.

The price, which is not self-regulated, but depends on supply and demand.

Market functions

The market must find answers to the questions: what, how, and for whom to produce, therefore it performs the following functions:

Pricing. The price is set based on the laws of the market: demand, supply, and emerging competition. It reflects how useful a given product is.

Mediation. The market connects consumers and producers, and everyone has the freedom to choose.

Regulation of supply and demand. This establishes the balance of goods and services.

Information. Information about goods, the seller, the amount of demand for specific goods, the state of the economy as a whole.

Stimulation. Constantly responding to demand with supply, market participants improve the quality of goods, create new technologies and maintain the efficiency of the economy.

Purification. The economy frees itself from unnecessary activities, weak units and encourages the development of promising ones.