write any four feature of market mechanism system
Answers
Answer:
The features of market mechanism system of allotting resources are as follows:
1. Ownership of resources of production is either private or individual.
2. Economic decisions are taken while keeping price mechanism in mind.
3. Economic decisions are taken only after keeping personal interest or profit.
4. Price mechanism takes care of production and income distribution.
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Answer:
Market mechanism in allocation of resources
Market mechanism system is also known as the Capitalist method. In this method, the process of resource allocation is decided by the market mechanism. Its related economic decisions include:
1. Which item to be produced?
2. In what measure to be produced?
3. How to distribute the production?
4. On which basis to pay for the machines involved in the production?
5. Which measures to be adopted to increase production?
6. Which measures to be adopted to decrease the cost of production?
DEFINITION
Price Mechanism of Allocating Resources
In the Capitalist method, money and price mechanism are supreme. People put forward their demands for various commodities and services through the market mechanism. People have to pay more money for the commodities that are much in demand. Entrepreneurs produce goods keeping in mind people's demand or customer's eagerness to pay a higher price. This is because the chief aim of entrepreneurs is to earn more profits. In the same way, they would like to invest in such production activity that would give the greatest return.
But, the price of any commodity would go down with a decrease in its demand. As the sale decreases, the entrepreneur's profit decreases or he starts making a loss. He, thus, stops or reduces its production.In this way, economic decisions are taken on the basis of the price mechanism in the Capitalist method.
DEFINITION
Features of Market Mechanism System
The features of market mechanism system of allotting resources are as follows:
1. Ownership of resources of production is either private or individual.
2. Economic decisions are taken while keeping price mechanism in mind.
3. Economic decisions are taken only after keeping personal interest or profit.
4. Price mechanism takes care of production and income distribution.
DEFINITION
Benefits of market mechanism system
The advantages of Market mechanism system include:
1. No wastage of resources of production
2. Abundant production
3. High lifestyle and inventions
4. Automatic and self-balancing
5. Growth of international market
DEFINITION
Limitation of Market Mechanism System
The limitations of Market mechanism system include:
1. Undesired waste of production
2. Unequal production distribution and income
3. Exploitation of labourers and customers
4. Rise in poverty and unemployment
DEFINITION
Social system in Market Mechanism
Social system evolved because of the failure of the Market or Capitalist method. In socialist system, all the economic decisions are taken by the state machinery. The state owns all the production of resources such as land, minerals, factories, and capital. There does not exist money and price mechanism in socialist system. But they are used only for settlement of account and comparative study. Economic decisions are taken keeping in mind the social welfare. Income is distributed equally and rationally in socialism. Differences between the rich and the poor are abolished and exploitation can almost be eradicated.