The goal of a market economy is to
The correct answer is a. consumers
Market economies are an economic system in which two forces, supply, and demand, govern the production of services and goods. Market economies aren’t governed by an authority centrally controlled (like the government) and instead are built on voluntary exchanges.
Market economies are dependent on the interaction between demand and supply for their functioning. “Demand” refers to the number of products and services people want or require. “Supply” refers to the number of products and services readily available to be purchased. If the supply is limited when the demand is very high, it increases the price someone can sell it for. However, if there’s an increased supply of a specific product, and the demand isn’t as high it more, the cost is likely to decrease. The demand and supply for any particular product or service tend to increase towards an equal equilibrium; however, the equality attained will not last for very long, and the tension between demand and supply results in a fluctuating market.
What Is a Market Economy?
A market economy is an economic system where economic decisions and the pricing of services and goods are determined by the interplay of the country’s citizens and businesses. There might be some central planning or intervention by the government, but generally, this term refers to a more market-oriented economic system.
Modern Market Economies
Every modern economy lies somewhere along a spectrum that runs through pure markets to fully planned. Most developed countries have technically mixed economies since they combine free markets with some government intervention. They are described as having market economies because they let market forces control most of their activities, usually intervening only when required to maintain stability.
Market economies could still participate in certain government interventions, including price-fixing licensing, quotas, and industrial subsidies. Most of the time, market economies have government-produced public goods, usually as a state-owned monopoly. But in general, market economies are defined by the decentralization of economic decisions by sellers and buyers who conduct everyday business. Particularly, markets are distinguished by the existence of functional markets controlled by corporate entities that allow the transfer and restructuring of production and production processes for entrepreneurs.
The pressure of competition ensures that prices are kept at a minimum. This also helps ensure that society can provide products and services with greater efficiency. If demand grows for an item, prices increase due to demand law.
The competitors see the potential to increase their earnings by manufacturing identical products, which add to their supply. This lowers prices to the point that only the most competitive competitors remain. Workers and consumers can also feel the pressure to compete.
The government’s role is to ensure that markets are functioning, open, fair, stable, and secure. For instance, the government has regulatory agencies to ensure that the products are suitable for consumption and use and that companies are not profiting from consumers.
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