In a market economy, the questions of What, How and Whom to produce are made by individuals and firms acting in their own best interests. In economic term a market is an arrangement that allows buyers and sellers to come together to conduct transactions.
The state plays little or no part in economic activity. Most of the people in the non-communist world earn and spend in societies which are still fundamentally market economies.
The market system of economic organization is also commonly described as a free enterprise or laissez — faire, or capitalist system. We shall use all these terms to stand for a market economy. Strictly speaking the pure market of laissez-faire system has never existed. Whenever there has been some form of political organization, the political authority has exercised some economic functions (e.g. controlling prices or levying taxation). It is useful, however, to consider the way in which a true market system would operate because it provides us with a simplified model, and by making modifications to the model we can approach the more realistic situations step by step.
Since consumers like products with low prices and high quality, producers in market economy will try to supply such products. Those who make the best products for the lowest prices will make profits and stay in business. Other producers will either go out of business or switch to different products consumer can buy.
There are several other essential elements in a market economy. One of these is private property. By «private property» we mean the right of individuals and business firms to own the means of production.
Although markets exist in traditional and command economies, the major means of production (firms, factories, farms, mines, etc.) are usually publicly owned. That is, they are owned by groups of people or by the government. In a market economy the means of production are owned by private individuals.
Private ownership gives people the incentive to use their property to produce things that will sell and earn them the profit.
This desire to earn the profits is a second ingredient in a market economy. Often referred to as the profit motive, it provides the fuel that drives sellers to produce the things that buyers want, and at a price they are willing to pay.
A market economy has several major advantages that traditional and command economies do not have. First, a market economy is flexible and can adjust to change over time. When gas prices in the United States began to level off in 1985 and then decline in 1986, the trend slowly began to reverse.
The second major advantage of the market economy is the freedom that exists for everyone involved. Producers are free to make whatever they think will sell. They are also free to produce their products in the most efficient manner. Consumers on the other hand are free to spend their money or buy whatever goods and services they wish to have.
The third advantage of the market economy is the lack of significant government intervention. Except for national defence, the government tries to stay out of the way. As long as there is a competition among producers, the market economy generally takes care of itself.
The final advantage of the market economy is the incredible variety of goods and services available to consumers. In fact, almost any product can and will be produced so long as there is a buyer for it.
XVII. Find the equivalents in the text:
власні інтереси, висока якість, пропонувати продукти, володіти засобами виробництва, заробляти прибуток, низька ціна, платити, гнучка система, національна оборона, переорієнтуватись, не втручатись, неймовірна різноманітність, спрощена модель, збирання податків.
XVIII. Complete the following sentences:
1. In a market economy the questions of What, How and Whom to produce are made by______.
2. In economic term a market is ________.
3. Since consumers like products with low prices and high quality_______.
4. Those who make the best products for the lowest prices will make_______.
5. Other producers will either go out of business or____.
6. A market economy has several major advantages that____.
7. The first advantage of the market economy is _____.
8. The second major advantage of the market economy is_____.
9. Consumers are free to spend their money or_____.
10. The third advantage of the market economy is____.
11. As long as there is competition among producers, the market economy generally .
12.The final advantage of the market economy is____.
XIX. Fill in the gaps with the given words.
profits, firms, private property, earn, advantages, products(2), flexible, to produce, individuals, market, the means of production, business, to conduct.
1. In a market economy, the questions of What, How and Whom to produce are made by and acting in their own best interests.
2.In economic term a______is an arrangement that allows buyers and sellers to come together______________________________ transaction.
3.Since consumers like with low prices and high quality, producers in market economy will try to supply such______.
4. Those who make the best products for the lowest prices will make and stay in ______________.
5. By______ we mean the right of individuals and business firm to own the means of production.
6. In a market economy_______________ are owned by private individuals.
7. Private ownership gives people the incentive to use their property things that will sell and them the profit.
8. A market economy has several major________ that traditional and command economies do not have.
9. A market economy is_______ and can adjust to change over time.
