Wednesday, May 4, 2011

Market Economy Definition

Free market economy definition can be put in very simple terms where it means a system where the buyers and the sellers are the ones that are responsible for all the trade choices that they make. This means that they are free to determine how goods and services are distributed. The forces of demand and supply have a lot to do with this and it is characterized by trading without tariffs or subsidies that have been imposed by the government.

One of the things that the government of any country is involved in is controlling and insuring that there is law and order. They ensure that the sellers set a fair price for the commodities that they are selling but it does not have a role in administering the price that is set for the commodity. The prices that the sellers set are those that are determined by demand and supply forces. The basis of allowing this type of market is so that the people will have the control that they need for the resources. The free market has so many other factors that determine how the trade is conducted and the living standards of the people there are really considered. There are many countries in the world today that have a distribution system.

This system is considered to be most efficient where the government wants an optimum way of how they can distribute the county's resources. It is associated with a society that uses capitalism where many of the means of productions are owned by individuals or they are privately owned. On the other hand, there is the socialist market where the government is the one that is responsible on regulating the system. This is to say that many of the prices of the goods and services that are in that particular country are administered by the government. The prices are fixed and in case there are any raw materials that are needed, they come from the market there in the country even before they can get them from another country.

These countries have been using the socialist system are gradually moving for capitalistic economy where they use the free markets. The biggest advantage about this is that a person gets what they deserve and what they have worked hard for. This is very different from the other system where the people are put in the same plane.

The success of this has been evident in so many countries where it has been used been used in the long term. There is a lot of liberalization where people are allowed to trade while exercising these principles. The success is determined by the growth and the increased level of trade. The free market economy definition is within the doctrines of so many different things and it is still for the growth. Both of these forms of trade are done for the good of that particular place and it is seen to enhance and help the citizens to attain prosperity and growth.

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