List 9 Characteristics of the market system
In a market system economy, decision making is widely dispersed. Capitalism by design, fuels itself. There are 9 key features which act simultaneously to enable the continued renewal of the market system.
Through private property individuals and businesses are able to obtain, use and dispose of property resources as they see fit. It is the right to private property which allows one to produce goods or services without the fear of another seizing assets or resources that one owns. Through ownership comes a responsibility to maintain and improve upon property thus raising its value.
The freedom of enterprise and choice provides ...view middle of the document...
Pricing places a value to the items which are exchanged. The system of markets and pricing is a coordinating mechanism of capitalism.
The use of technology and capital goods provides efficiency in production. New technologies often bring vast monetary rewards to innovators. It’s this self interest that drives the desire for new items and forms of production. Capital goods offer an exception to the most direct methods of production, which are usually the least efficient. Through the use of these capital goods less production work is wasted while the output is increased.
Specialization makes use of differences in abilities of people, firms and nations. By focusing on production of items which have a low opportunity cost to produce, a country can improve its output of such items and gain excess to be used in international trade. The division of labor is specialization when applied to human outputs. This division of labor makes use of differences in abilities, encourages learning and saves time.
Money performs as a medium of exchange in a marketplace. While any object can be substituted for paper money, the idea is that any item having a relative value to another person in an exchange for another item is money. Tobacco was once a treated as money in Colonial America and nearly all business transactions is the state of Maryland were conducted in terms of tobacco. As...