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Learn Free Flow Of Market Economy.pdf

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Learn Free Flow Of Market Economy.pdf

  1. 1. Learn Free Flow Of Market Economy
  2. 2. A market economy is the free flow of products and services based on supply and demand in the market.
  3. 3. Adam Smith famously coined the concept of the "invisible hand." The invisible hand is the power to allocate resources to production based on supply and demand automatically. Under a market economy, we answer the following questions:
  4. 4. Wajid khan asks What do you produce? We need to have the goods that are in the highest demand. How should it be made? Companies can maximize their profits by improving the quality of their products. Improving quality allows companies to charge higher prices.
  5. 5. Who should you produce for? Businesses must have customers willing to pay for their goods and services. Environmental sustainability is only sometimes included in these conversations. Read how economic power and investment are helping create a more sustainable planet.
  6. 6. What Is A Market Economy? A market economy is an open economy that allows the free flow of goods and services between producers and consumers based on supply and demand. Wajid khan Mp discusses In a market economy, economic decisions are regulated by the market itself, which constantly finds ways to restore equilibrium.
  7. 7. What do you mean? As industry prices rise due to increased consumer demand, the labor required to produce more output increases proportionately. In this way, producers supply products that meet consumer demand.
  8. 8. On the other hand, competitiveness keeps prices at a moderate level, which increases consumption in the long run—an economic system based on supply and demand. The quantity of product produced is determined by supply and demand.
  9. 9. Type Of Economy There are four types of economies: a traditional economy, a command economy, a market economy, and a mixed economy
  10. 10. A market economy is a system in which economic decisions are made based on supply and demand in the market. The market determines what goods and services are produced, how much is created, and the price of the goods.
  11. 11. In a free market economy, resources are owned by individuals, and individuals rather than governments determine the allocation of resources. No political economy in the world has been recognized as a 100% free market.
  12. 12. Market Theory A market economy uses the forces of supply and demand to determine the price and quantity of goods and services needed in the market. Entrepreneurs produce products or provide services that they sell to other consumers. Buyers and sellers must agree on terms of trade based on consumer preferences for the price of goods and services.
  13. 13. Profit determines the allocation of resources to various business and production processes the entrepreneur wants to make by producing a product or service that is more valuable than others for the customer. Successful entrepreneurs are given income that can be reinvested in their future businesses.
  14. 14. Modern Market Economy Most modern world economies are between a pure market economy and a thoroughly planned market economy. Developed countries typically use mixed economies, often free markets subject to some form of government interference.
  15. 15. These economies are sometimes classified as market economies because needs can direct most activities with government intervention only when market stability is required.
  16. 16. Government interventions include pricing, licensing, quotas, and industry subsidies. Market economies are characterized by decentralized economic decisions buyers and sellers make in their day-to-day operations.
  17. 17. Even if a market economy were the prevailing system, it would be necessary to consider what level of government intervention is optimal for efficiency.
  18. 18. Resources are automatically allocated for the most efficient use. Consumers can choose from a wide range of products. The interests of market participants and the pursuit of self-interest drive innovation. Advantages Of A Market Economy The advantages of a market economy include the following: 1. 2. 3. 4.
  19. 19. Competition ensures better quality products, diligent workers, and, in turn, higher overall efficiency. 1. The economy offers a high chance of prosperity. Products and services are created based on customer requirements and willingness to pay.
  20. 20. Disadvantages Of the Market Economy Weaknesses of the market economy include: Environmental Damage - Economic activities can damage the environment. Ecological well-being is not the focus of market economies. Government regulations must provide for environmental safety.
  21. 21. Monopolies - Tech breakthroughs can lead to monopolies. Monopolies tend to take advantage of consumers. Income-Wealth Mismatch – When the return on investment is higher than economic growth, there is an ncome-wealth gap. Destabilize the economy in the long run.
  22. 22. Automatic Resource Allocation - Certain non-profitable but important sectors may be abandoned due to insufficient resources, which can lead to serious long- term consequences. Dangerous trends – for example, the profit motive could lead to the introduction of automation and exploitation of workers, leading to lower disposable incomes and less consumption, pushing the economy into recession.
  23. 23. No government intervention - Manufacturers can charge customers incidental fees. Inequality – We are facing the problem of inequality among citizens.
  24. 24. Profit as a motive – Profit is the only motive for producing goods, as the government does not control production. Poor Working Conditions – Poor working conditions can exist due to a lack of government regulation. Unemployment – ​ ​ Unemployment is likely to rise as the market lacks government control.
  25. 25. Canadian politician wajid khan mentions Market economy example The United States, Germany, and Canada are market economies where the free movement of goods and services facilitates and protects producers and consumers.
  26. 26. No Government Control – Goods and services are exchanged based on market demand and supply. The government doesn't control it. Supply Meets Demand – The product produced should correspond to the consumer's wants. Consumers should be willing to pay for the products they want.
  27. 27. Increased Profitability - Companies must manufacture products that customers want to be profitable. By increasing profitability, you can use more labor to produce more products and earn more income.
  28. 28. Innovation – Innovative companies can create products that consumers want. We can also use new technology and equipment to improve production processes, product quality, and customer satisfaction. market conclusion
  29. 29. A market economy is an economy that allows the free flow of goods and services based on the interaction of supply and demand. Free competition among entrepreneurs in the market is promoted.
  30. 30. The characteristics of a market economy are: The economic system is based on supply and demand. The quantity of goods and services produced is determined by supply and demand.
  31. 31. Wajid khan describes four types of economy: traditional economy, command economy, the market economy, and mixed economy. Government interventions include pricing, licensing, quotas, and industry subsidies.
  32. 32. The benefits of a market economy include increased efficiency, production, and innovation. Disadvantages include monopolies, lack of government intervention, poor working conditions, and unemployment.

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