Over the years, trade relations have been shaped by economic teachings. The modern world is dominated by the idea of freedom of speech and action, which would not violate the rights of other people. This principle creates signs of a market economy. Previously, in many countries there was a command-and-control system in which trade was under strict control, but it has not stood the test of time and has undergone fundamental changes.
Main signs of a market economy
Today the market economy exists in many countries. Its main feature is the self-regulation of the quantity of goods produced with the requests of buyers. 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 type of activity. At the same time, buyers can purchase goods and services within the limits of their money, thereby satisfying their needs. In a free market environment, entrepreneurs are interested in qualityas a result of their activities for profit, which creates mutually beneficial conditions for producers and consumers. The principle of free competition is regulative, it constantly exposes
No checks already established firms, in this case, weak firms are forced to leave the market. All of the above features are signs of a pure market economy, where the state only protects the rights of buyers and producers. It should be noted that in such a system all conflicts are resolved by the courts. Signs of a market economy are no less significant when concluding agreements between business entities that have the right to regulate their points at their discretion. In organizing the conditions for conducting free business, an appropriate infrastructure is being developed. Its function is to connect the buyer and the seller. For this, institutions such as banks, exchanges, insurance and advertising agencies, etc. are being created.
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 supply and demand factors. At the same time, it performs the following functions:
- The distribution of income that affects purchasing power.
- Balancing supply and demand indicators.
- Regulates business conditions.
- Informs both the buyer and the seller about the state of the market, which, first of all,manifests itself through a shortage or surplus of goods.
- Provides profits for entrepreneurs, which encourages them to be productive.
All these functions are manifested in the circulation of natural resources, which turn into goods 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.
