Sample Essay on Benefits of Market Oriented Economy

ByWilliamson Lindsey

Sample Essay on Benefits of Market Oriented Economy

There are many benefits of market oriented economy. A market oriented economy is a mixed economy that is highly dependent on the market to answer the major questions of resource allocation with modest involvement of the government. A market oriented economy is commonly known as capitalism and the phrase market oriented economy is mostly used to describe the economic structure of the market. A good example of a market oriented economy is the economy of the United States of America.

This economy is dependent predominantly on how efficiency a market is in terms of competitiveness in allocating resources. However, the government is slightly involved by bringing economic policies that address business cycles, market failures and other possible problems.

There are three main institutions in a market oriented economy. These are private property ownership where individuals own goods, resources and other assets. Individual freedom also prevails in the market. Individuals who own goods, resources and assets are free to use them as they please. Market is also competitive. In the market, commodities owned by individuals are exchanged and questions of resource allocation are also answered in a competitive market.

Basically, a market oriented economy functions on the basis of market forces. Demand and supply determine production and distribution. Market institutions depend on how market forces interact to distribute and allocate commodities. Market forces also determine price of the commodities.

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According to experts, there are many benefits of a market oriented economy. One of the major benefits of this economy is freedom that buyers and producers have. A buyer is free to buy any commodity they please and in any amount. On the other hand, producers are free to supply any product they please and in any amount depending on how market forces are interacting. Producers have the freedom to undertake rewards and risks associated with increased production without the government interfering with how market forces function.

Perhaps, the major benefit of a market oriented economy is that market forces such as supply and demand determine price of commodities without oligopolistic or monopolistic influences. State does not intervene in determining what is produced and in what amount. Rather the state has limited role which is to ensure transparency in determining the prices charged for commodities.

In a perfect world, market oriented economy would lead to a situation of complete transparency. This is very important for optimum distribution of resources. However, this can happen only when supply equals demand and a unique price of each commodity.

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