market and the market mechanism are self-regulating system resource production, exchange and distribution of wealth, which is based on the competitive environment and the interaction of supply and demand controlled free price signals.
in a decentralized market economy free offer through competition and price flexibility adapts to changing demand, which makes impossible the existence of chronic shortages, poor quality of products and their range is too narrow.
Economists classical and neoclassical schools, researching the market and the market mechanism, emphasized the fact that the market is able to automatically restore the balance in cases of temporary loss.Adjusting the proportions of production processes is a function of the law of value.
market and the market mechanism reveal their possible only in a competitive environment.The greater the deviation of the real market of the ideal model, the operation of the market mechanism is less effective.The pricing monopoly of influence, which reduces the efficiency with which resources are to be used, with revenues mainly shared between monopolists.In this situation, it is necessary to state intervention in the economy to mitigate the negative impact on the competitive environment the impact of monopolies.
market and the market mechanism is formed prices and allocate resources.The mechanism of market self-regulation includes such key concepts as competition, price, supply and demand.
Demand is the term generalizing.He describes all potential and actual customers.It indicates the demand of the manifestation of people's needs, which are secured by cash.It does not represent the totality of needs and only that part which is secured by cash.In this market, and the market mechanism only satisfy those needs that are expressed through demand.It excludes services and benefits for communities, ie public goods.
Offer , as demand is an umbrella term.It describes the behavior of potential and actual sellers (producers) of goods.The offer is sometimes defined as a set of products within certain price limits which are present on the market and can be sold to manufacturers.
Price in monetary terms shows the value of the goods.The price depends on the cost of the goods and the ratio of supply and demand on the market.They set prices under the influence of economic laws, especially the law of value, according to which prices are based on the socially necessary labor costs.Also, the price affect the laws of supply and demand.The mechanism of the market economy is manifested in non-conformity cases of categories of supply and demand in the exchange.
Competition acts form of interaction between subjects of the market and the market mechanism, it can also adjust the proportion of supply and demand.
Each element of the mechanism of the market is related to other most directly and intimately.Price is the main tool of the market mechanism, coordinating and adapting to each other offer with the demand.Focusing on the price, entrepreneurs and consumers choose what products to produce or acquire.That price characterize the state of the market.
elements of the market mechanism are constantly interacting.Demand related to the proposal, they are dependent on the price level.In turn, the competition influences all these categories, integrating them into the system.With such a mechanism for the effect of the components on each other, they balance market relations.
