give an exmaple in the u.s.a. economy where amarket economy principle is at work?

Answer 1

Though, the real estate and agricultural markets in the US are good examples, they are both highly regulated and/or influenced by the government. The real estate markets are regulated through zoning laws which determine how property can be used and what can built on land. Farming is managed considerably by the government through subsidies and through import/export tariffs which can have profound impacts on pricing.

I think a better example of a market economy system are the US financial markets (i.e. the stock and bond markets). Though still regulated, there are relatively fewer distortions as a result of government policies in these markets. In addition, there are many participants from all around the globe involved in these markets (including individual households) making these markets very competitive and difficult to monopolize and manipulate over the long-term.

Answer 2

Agriculture is NOT a real good example of a market economy, as there is a tremendous amount of government intrusion and subsidies, and the government actually supports various cartels that fix prices (milk lobby being the most recent newsworthy example) and blocks foreign competition with high tariffs (eg, sugar).

A better example is practically anything else. MP3 players for example.

Answer 3

agriculture is the closest thing we have to perfect competition because there are many farmers and the products are relatively homogeneous... an ear of corn is more or less the same no matter where you buy it.

ahem... I said that agriculture is the closest example of perfect competition that we have... perfect competition has the following characteristics...

-Very large number of firms - Farms are small in relation to the size of the entire market... while in recent years there has been a move towards fewer, larger farms, this still holds true

on the other hand, there are only a few number of MP3 player producers

-Standardized product - most produce is a uniform and homogeneous product. It is not possible to make a distinction between the corn of one farm and that of another.

on the other hand, you can plainly tell who made your MP3 player.

-Price takers (firms have no control over price) - A corn producer who would try to raise his/her revenues by increasing the price for corn, would find the consumers of the corn in that region unwilling to buy his/her corn any longer. One individual farmer is thus unable to affect the price of corn in the entire market.

on the other hand, if Apple raises the price of their Ipod then people will still buy them because of brand recognition.

-Free entry and exit - Agricultural production can start for most crops by simply planting on a parcel of land. While economies of scale have made it a bit harder to start a farm in recent years, this is still relatively true.

You could probably start an MP3 player company if you had the technology.


In short... you don't know what you are talking about... the market for MP3 players is at least monopolistic competition (and probably closer to oligopoly). "Market economies", (which I take as meaning a traditional supply and demand relationship) only occur in perfect competition situation... monopolistic firms DO NOT have supply curves... and like I said, the closest thing we have to that is agriculture (even though there is a certain amount of intervention).

Also the stock market... that's close to perfect competition too.

Answer 4

Real estate for example. Truly based on market economy.
First it depends on the economy in general to be either active or passive and then the prices are determined from the open market.