What is Market?
We often visit places where we buy clothes, groceries, electronic items, and services. What are these places called? The answer is simple—market. However, the market doesn’t have to be physical, like the retail stores around us. Market is an economic term that comprises all activities of buying and selling goods and services virtually, physically, or through any kind of platform that links the buyers and sellers.
How market works
A market is a platform where buyers and sellers assemble and engage in transactions. When a market has an influx of active buyers and sellers, it qualifies as a perfect competition market. Prices of goods and services are determined within this market based on demand and supply. Generally, buyers drive demand, while sellers supply goods and services. Price equilibrium is achieved within the market when demand and supply are harmonious.
Advantages of Market
Markets, particularly free markets within a market economy, offer several advantages:
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Efficiency: Supply and demand prescribe what gets produced and how much. This system allocates resources toward goods and services that consumers value most, bypassing the inefficiencies of centralized planning.
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Consumer Choice: Competition amidst businesses leads to a vaster assortment of goods and services at competitive prices, and consumers have more freedom to choose what they want to buy.
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Innovation: The purpose of profit incentivizes businesses to constantly develop new and improved products and services. This promotes a culture of innovation that benefits consumers with better options.
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Economic Growth: Competition leads to efficiency and innovation, which in turn increases productivity and overall economic output.
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Limited Government Intervention: Ideally, markets function with minimal government interference. This allows for a more decentralized and flexible system that can adapt to changing consumer preferences.
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