MONOPOLY

Monopoly



Monopoly

Part A: 1

Market system in the economy is a way of organizing economic life, in which capital and land are in private ownership, and resource allocation, production, exchange and consumption of goods and services implemented on the basis of supply and demand. The market economy is based on the principles of free enterprise and choice.  The basis of this system is

Private ownership;

Private economic initiative; and

The market organization for resource allocation.

Creation of precisely those goods in which society needs, by a system of markets, each of which are bought and sold goods and resources of a specific type (there are land market, capital market , labour markets , markets for goods and services that are directly consumed by humans).  The market system organizes and coordinates human activities rather than through state planning but by mutual interactions of buyers and sellers. Market system is termed the best mechanism for allocating scarce resources because the market determines the degree of success of any economic initiative, forming amounts of revenues, which brings the property to its owners, dictates the proportions of the allocation of scarce resources to alternative areas to use them. 

The system encourages positive investment because well-being of everyone in the market system is determined by how well an individual can sell commodities in the market, which is owned by (a) its work force (b) skills (c) own products (d) land and (e) ability to carry out commercial operations, which shall ultimately encourage and improve the contribution of each individual to society itself; someone who offers the best product at better terms (more-for-less value proposition) opens his way to the growth of their own welfare. (Baumol, 2006, 12)

Dignity of the market mechanism is that it forces each seller to think about the interests of buyers, thus the seller is seeking his own benefit. But the buyer is forced to reckon with the interests of the seller - he can get the desired product, only paying for it at the current market price. Analyzing the mechanism of market coordination of interests of buyers and sellers, the eminent British scientist and economist Adam Smith wrote in his famous book "An Inquiry into the Nature and Causes of the Wealth of Nations" (1776): "Everyone thinks only about his own benefit, but the invisible hand, which he directs as in many others, will lead him to a result of which he himself did not dream.”

Under the "invisible hand" of the market, allowing market-oriented economic system to coordinate the activities of hundreds of millions of people since Adam Smith, economists mean the price mechanism. That price, folding in the process of competition in the market is all sellers and buyers the main source of information about the ratio of supply of goods and demand for them. Markets based on competition, are the most effective way known to man the allocation of scarce productive resources and created with the help of their benefits.  Dignity of competition is that only by producing the best on ...