can someone please explain this?

Question

why markets are usually a good way to organize economic activity? I just don't really get this subject.
thanks

Answer 1

That's a very broad question.

If you're asking about the market economy (as opposed to a supermarket or bazaar), it's usually considered the best system because it naturally adjusts.

When there isn't enough of something to go around, people are willing to pay more. That means profits for producers, who are more willing to make extra - by paying overtime or expanding their factory or maybe someone new getting into the business, or by doing research into substitutes...but eventually you end up with more for people to buy.

The opposite is also true. If people don't like a product, or if a company makes too much of it (say, for a fad) the company won't be able to sell it all. But having it sitting around in a warehouse somewhere costs money (you can't use that space for anything else), so companies will try and sell them at a discount, or offer a deal of some kind. Basically, the price drops...and companies learn from this by producing less, or getting out of the business altogether, or changing brands.

I'm simplifying a bit, but the real beauty of a market economy is that it runs by itself. Does that help?

Answer 2

because markets match potential buyers with potential sellers. or potential savers with potential investors.( savings are the ultimate source of loanable funds which are used in investment). Without the market, it would be harder for these pairs to find each other.

Answer 3

do you know definition of word "market"?!!!
demand and supply meet each other then what?
it turns on the economic circulation!!!