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Who determines what to produce how to produce and for whom to produce in a market economy?
Wiki User
∙ 13y ago
In a free market economy, the producers of products determine social needs through the use of market signals. The most common of these signals is demand for products. It is often easily visible by what is known as demand-pull inflation, increases in the price of wanted goods due to a lack of supply and the purchaser's willingness to pay more for the product to guarantee himself access to it. This sends a signal to producers of the good that they can maximize their profits by allocating further resources to producing the good being demanded as opposed to other possible products.
As production increases, the price level of the product in question ultimately settles at a new equilibrium point (the point at which supply equals demand) and both consumers and producers are content.
When goods compete, these signals determine which product 'survives', as with VHS/BetaMAX and HD-DVD/Blu-Ray. The more heavily demanded good acquires more market share until it is unprofitable to manufacture the less heavily demanded good and ultimately it is phased out. As actors in an economy will undoubtedly pursue the better of products, this encourages innovation and development of new and better products to compete with those that currently dominate the market landscape.
Production is pursued in a manner which ensures the least waste and maximizes efficiency, as to therefore maximize profit. The consumers, those for whom the goods are produced, are catered to by the producers, and are generally anyone who has goods/currency to exchange for the products they desire.
Wiki User
∙ 11y ago
Wiki User
∙ 13y agoNo one specifically decides these things in a market economy - at least not on a general level. A market operates as the summation of individual actions and choices which create a series of prices and exchange rates for goods and services. Therefore, 'who determines what to produce' is the individuals who choose to produce and whatever they choose to make; 'how to produce' is chosen by those who produce; 'whom to produce for' is for whomever wishes to buy the product. Adam Smith called this operation 'the invisible hand' because it operated with no guidance. Finally, all of this is subject to minor rules and regulations enacted by states and socially tolerated practises.
Wiki User
∙ 16y agoMarket Systems have three factors, what (will be produced), How (will it be produced), for whom (will it be produced)
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In Which type of economy does the government decide what to produce how to produce and for whom to produce?
Controlled.
What is the difference between a traditional and market economy?
In a {Traditional Economy}, economic decisions are based on customs handed down from generation to generation. In a {Market Economy} individuals make their own decisions about what to produce how to produce it & for whom to produce it.
What are disadvantages to a market economy?
A Market economy is reffered to as an economy in which the consumers decide what to produce, How to produce and For whom to produce. There are several disadvantages of a market economy. The main one being an inefficient allocation of resources refered to as market failure. Firstly, some good and services would be under provided such as defence and education.
How are the economic questions of what to produce and how to produce decided in a market economy such as the US?
All three of the basic economic questions, in a market economy is answered by the market: What to produce: This is determined by what is demanded and what can be supplied (with the resources) in an economy. How to produce: This is determined by the resource available although theoretically, it should produce at the bottom point in the average cost curve. To whom to produce: Although not stated in the question, this is still a fundamental question in an economy. In a market economy, this question is answered by the demand and supply: The good is produced for all those who is willing and able to buy that good at a given price (determined by the demand and supply.)
How does Israel's economy answer the questions of how to produce what to produce it and for whom to produce it?
cut diamonds
In Which type of economy does the government decide what to produce how to produce and for whom to produce?
Controlled.
For whom are goods services produce in a market economy?
In a market economy, goods and services are produced for consumers.
What is the difference between traditional economy and market economy?
In a {Traditional Economy}, economic decisions are based on customs handed down from generation to generation. In a {Market Economy} individuals make their own decisions about what to produce how to produce it & for whom to produce it.
What is the difference between a traditional and market economy?
In a {Traditional Economy}, economic decisions are based on customs handed down from generation to generation. In a {Market Economy} individuals make their own decisions about what to produce how to produce it & for whom to produce it.
What are disadvantages to a market economy?
A Market economy is reffered to as an economy in which the consumers decide what to produce, How to produce and For whom to produce. There are several disadvantages of a market economy. The main one being an inefficient allocation of resources refered to as market failure. Firstly, some good and services would be under provided such as defence and education.
How are the economic questions of what to produce and how to produce decided in a market economy such as the US?
All three of the basic economic questions, in a market economy is answered by the market: What to produce: This is determined by what is demanded and what can be supplied (with the resources) in an economy. How to produce: This is determined by the resource available although theoretically, it should produce at the bottom point in the average cost curve. To whom to produce: Although not stated in the question, this is still a fundamental question in an economy. In a market economy, this question is answered by the demand and supply: The good is produced for all those who is willing and able to buy that good at a given price (determined by the demand and supply.)
What type of economy does the government decide what to produce and how to produce and for whom to produce?
Controlled.
Which type of economy does the government decide what to produce how to produce and for whom to produce?
Controlled.
What type of economy does the government decide what to produce how to produce and for whom to produce?
Controlled.
How does Israel's economy answer the questions of how to produce what to produce it and for whom to produce it?
cut diamonds
For whom to produce?
It is said that the question of "for whom to produce" is answered by the market forces in a free market economy. Supply and demand are said to be the market forces. Demand here means people who have enough money to pay on the goods supplied to the market. So it can be said that companies produces for those that have enough money to pay for their goods that already have a cost and a margin that must be gained.
In a pure market exonomy the for whom or distrubution question is largely anawer by who-?
In the pure economy the for whom or distribution question is usually largely answered by the market.
