Among the categories of market economy, supply, demand and market equilibrium, are perhaps the most important and upotrebimo.These categories are characterized by a set of performance indicators of various forms and types of businesses.
In the simplest sense, the demand - a measure of the value of many products that consumers can buy for a particular period of time.Two types of demand to distinguish between modern science.
individual demand characterizes the demand for a specific, single individual.
Industry demand serves as an indicator of total demand for this product of all market participants.The maximum quantity of goods that individuals can purchase at a given price and for a specific time index is characterized by the volume of demand.
Almost demand, supply and market equilibrium is measured using various techniques.For example, the scale of demand shows the ratio between the quantity of the product and its price.In this relationship, in fact, built by the law of demand, which is that the quantity demanded decreases with an increase in prices for this commodity.Consequently, the demand function is the value of the inverse function of price.If rates designated as P and the demand as M, the relationship between them will be reflected by the formula F (D) = 1 / f (P).However, economic theory and provides some exceptions to this law, characterizing the demand, supply and market equilibrium.These exemptions apply to certain groups of goods that are staying on the market, are not affected by these laws.We are talking about a group of Griffith, which include all essential goods and Veblen goods, which include luxuries.
proposal describes the physical quantity of goods that firms and businesses are ready to submit to the placing on the market, its value is determined in the same way as it is done in relation to demand.It turns out this relationship: F (S) = f (P), where S - the value of the supply of goods.
Market equilibrium reflects a market situation in which parametrically demand equals supply and thus formed the equilibrium price.In addition to the categories
demand, supply and market equilibrium, a very important indicator of the state of the market is the notion of flexibility, which is the amount of change in one parameter when changing the market another.There are different types of flexibility: on demand, income, and costs, arc elasticity, cross and others.They, together with indicators of time capabilities of enterprises, define the types of market equilibrium.
When demand increases, and the company did not have enough time to increase the supply, there is an instantaneous equilibrium.It is generated only when the price exceeds the original.
short-term equilibrium occurs when the growth in demand manufacturers are starting to increase the supply by raising production volumes.
long-term total achieved by increasing the volume of all enterprises in the industry.This increases the elasticity of supply, and price becomes a "normal market".
As can be seen, even from such a superficial analysis, there are definite advantages and disadvantages of the market mechanism.Among its advantages include economic democracy, efficient allocation and flexibility.
to the list of objective limitations include:
- inability to efficiently use natural resources;
- only promotes the adoption of management solutions that are effective for a short stage of business activity;
- not stimulate the reproduction of public goods;
- develops unevenly.
favorable background for the development of business determined by the ratio of advantages and disadvantages, which helps to choose the right strategy for economic development.
