market mechanism

about market mechanism

1. Dav College sector ten Prepared byJamshid Ahmad Ludin Roll number 34060 Subject: Economic - Administration Submitted to Sumita Singh ( respected ) prepared by jamshid Ahmad ludin roll number 34060 1

2. Market mechanism prepared by jamshid Ahmad ludin roll number 34060 2

3. Content Introduction Meaning of market mechanism Difference between market mechanism and price mechanism Mine feature Definition of Supply, demand and price Definition of Equilibrium with Example Advantage market mechanism Disadvantage market mechanism Conclusion prepared by jamshid Ahmad ludin roll number 34060 3

4. Introduction Every commodity and service has its own price determined by two forces demand and supply in a free enterprise economy there are as many prices as there are goods service and factors of production all price are collectively called price mechanism the price mechanism is also known as market mechanism where each individual is interested in knowing whether goods he wants to buy have become cheaper dearer, similarly a producer is interested in knowing whether the price of products which he produces have gone up or down. prepared by jamshid Ahmad ludin roll number 34060 4

5. what is a Market? Market is the place of that where goods and services are brought and sold Or A place / region where sellers and buyers are interacted with goods and service by selling and purchasing at a given price it is considered as a process Goods and service Buyers and sellers A place or region Given price What is a mechanism ? mechanism is a mathematical structure that models institutions through which economic activity is guided and coordinated. They seek to do so in ways that economize on the resources needed to operate the institutions, and that provide incentives that induce the required behaviors prepared by jamshid Ahmad ludin roll number 34060 5

6. What is market mechanism? Market mechanism is that place or region which the buyers and sellers of commodity are able to contact each other for having economic as exchange as per the requirements prepared by jamshid Ahmad ludin roll number 34060 6

7. Market mechanism is often interpreted as a ‘free’ market system. For a layman ‘free’ means that when you go to a market, there is no re­striction – you can buy as much as you want OR sell any amount OR choose to do nothing prepared by jamshid Ahmad ludin roll number 34060 7

8. What are the differences between market mechanism and price mechanism? In economics, a price mechanism is the manner in which the prices of goods or services affect. The supply and demand for goods and services, principally by the price elasticity of demand. A price mechanism, part of a market mechanism, comprises various ways to match up buyers and sellers. prepared by jamshid Ahmad ludin roll number 34060 8

9. demand Supply and price Demand The demand for product means the number of units of the product that people are willing to buy at a given market price Supply The supply of a product means the number of units of the product that producers are willing to make available for sale at a given marker price Price The price of any product in the long run is determined by the interaction of the supply of and the demand for the product prepared by jamshid Ahmad ludin roll number 34060 9

10. Equilibrium What does a market equilibrium mean? Equilibrium is the state in which market supply and demand balance each other, and as a result prices become stable. Generally, an over-supply of goods or services causes prices to go down, which results in higher demand—while an under-supply or shortage causes prices to go up resulting in less demand. prepared by jamshid Ahmad ludin roll number 34060 10

11. Chart of demand and supply Price Quantity demand Quantity supply Market position Effect on price 500 50 30 Exist demand 1000 45 45 Equilibrium 300 30 50 Exist supply prepared by jamshid Ahmad ludin roll number 34060 11

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13. Features Need not have to be a particular place or area Buyers and sellers need not come into personal contact with each other Ownership of resources of production is either private or individual . Economic decisions are taken while keeping price mechanism in mind. Word market may refer to a commodity or service or to geographical area. To provide an effective mechanism that results in emission reductions at a least cost option. The buyers and sellers are able to strike or dial about the prices and quantities to be brought and sold. Economists distinguish market on the basis of Nature of goods and services No of firms and degree of competition prepared by jamshid Ahmad ludin roll number 34060 13

14. The structure of market mechanism What kind of goods are sole Who determines the market prices Organization Factors that determine the market forms Number of buyers and sellers Nature of the product Knowledge about market Freedom of intern or exit Degree of price and influence prepared by jamshid Ahmad ludin roll number 34060 14

15. The form of Markets prepared by jamshid Ahmad ludin roll number 34060 15

16. Advantage Give us to freedom to take decisions regarding buying and selling Bring together potential users and sellers in an environment that both can gain from the interaction Allows and Drives innovation and cost reductions Creates competition prepared by jamshid Ahmad ludin roll number 34060 16

17. Disadvantage Sustainable development not always clearly addressed in the line with expectations Market mechanism fails to provide a proper guideline for using appropriate material for selecting project. It diverts investment to those directions in which profits are high, neglecting socially desirable low profit ventures Market can only serve those who are part of the market system Market as a mechanism does not ensure that individual decision will optimize economic perform­ance in terms of society’s preferences and economic goals Market mechanism is unlikely to produce the rapid structural changes which development requires. prepared by jamshid Ahmad ludin roll number 34060 17

18. Conclusion Supply and demand interact to determine the market clearing price When not in equilibrium the market will adjust to alleviate a shortage or surplus and return the market to equilibrium Markets must be competitive for the mechanism to be efficient Supply and demand analysis can: Help us understand predict how world economic conditions affect market price and production Analyze the impact of government price controls, minimum wages, price supports, and production incentives on the economy Determine how taxes, subsidies, tariffs and import quotas affect consumers and producers prepared by jamshid Ahmad ludin roll number 34060 18

19. The end prepared by jamshid Ahmad ludin roll number 34060 19

20. Thanks for the watching prepared by jamshid Ahmad ludin roll number 34060 20