Market mechanism
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market mechanism
The interaction of supply, demand, and prices. Here is a simple example: imagine that two producers of fizzy drinks are in competition. One produces orangeade, the other lemonade. If tastes swing away from orangeade to lemonade, demand falls for the former and rises for the latter. In response to falling demand, the orangeade producer lowers prices; in response to rising demand, the lemonade producer raises them. The consumers react to the higher prices by buying less lemonade, and to the lower prices by buying more orangeade, so that demand for the two returns to the original level.
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Market mechanism
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Market mechanism
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Market mechanism is a term from economics referring to the use of money exchanged by buyers and sellers with an open and understood system of value and time trade offs to produce the best distribution of goods and services. The use of the market mechanism imply in a free market; there can be captive or controlled markets which seek to use supply and demand, or some other form of charging for scarcity, both in social situations and in engineering. This is a main term when it comes to marketing in economics.In this we have three types of economy free market economy,command or planned economy and mixed economy.In free market economy all the resources are allocated by private sector(Individuals,households and group of individuals), in planned economy all the resources are owned by the public sector(local and central govt) and in mixed economy the resources are owned by both private and public sector.
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Oxford Dictionary of Geography
A Dictionary of Geography. Copyright © Susan Mayhew 1992, 1997, 2004. All rights reserved.
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