Definition of market economy
A market economy is defined as a free market system in which Decision making Related to resources, production, consumption, prices, and competition, and all market economies have limited freedom, in addition to government intervention in them; in order to encourage demand, or weaken it, or encourage competition to prevent the emergence of monopolies, and the market economy is also called by other names such as: the free market, or the free market economy, or the free economy.[١]
Modern Market Economics
Most modern economies are along a continuum from purely market to planned economies. Most developed countries are technically mixed economies because they combine free markets with some government intervention. However, they also have market economies because they allow market forces to control and direct most economic activity.[٢]
Characteristics of a market economy
Private property
Most goods and services in a market economy are privately owned, meaning that owners can enter into legally binding contracts to sell, buy, or rent their property, and thus have the right to Profit From the property.[٣]
option
In a market economy, owners have the freedom to produce, buy, And sell Goods and services are competitive in the market, but there are two constraints: the purchase or sale price, and the amount of capital they have.[٣]
Competition
A market economy is characterized by the force of competitive pressure that keeps prices low, in addition to ensuring that goods and services are provided more efficiently. Once the demand for an item increases, the price rises due to the law of demand, and from there competitors raise their prices. Their profits from producing this item increase the supply..[٣]
Limited role of government
The role of government in a market economy is limited to ensuring that markets are open and functioning, in addition to strengthening national defense in order to protect markets, and it also ensures equal access to markets, and prevents monopolies that limit competition, in addition to preventing market manipulation.[٣]
Market and price system
Economy depends The market has effective plans for selling goods and services, and obtaining All buyers and sellers have equal access to the same information, and price changes are a clear indication of an advance or decline in supply and demand.[٣]
the reviewer
- ↑ “market economy “, www.businessdictionary.com, Retrieved 2-10-2018. Edited.
- ↑ “Market Economy”, www.investopedia.com, Retrieved 2-10-2018. Edited.
- ^ A for T Th G KIMBERLY AMADEO (13-8-2018), “Market Economy, Its Characteristics, Pros, and Cons, with Examples”، www.thebalance.com, Retrieved 2-10-2018. Edited.
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