Factors of Market Economy
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”
Adam Smith
1 Introduction
“We want water, we need water!” The Bolivian farmer is out of his mind; many like-minded citizens are staying next to him, yelling the same.
What is the reason for his anger? And what has happened to him and many other Bolivians?
In an article with the title “The drop on the hot market” the German author Jens Müller-Bauseneik explains the consequences of the privatization of the water supply in Bolivia in the year 1999, which went utterly wrong. The private company Bechtel Enterprise Holding tried to realize more profit.
In today’s world nearly every country’s system is the market economy – but why has this economic system achieved the leading role in our global world?
It’s my concern to explain “What factors constitute the basis of the market economy?” by investigating various trustworthy sources.
Economy is dealing with the “satisfaction of human needs”.
Natural limitation of resources and goods, called “scarce resources”, lead to a tension between unlimited demand and limited availability.
Every nation has to decide on a system for “allocating and its resources among its citizens, both individuals and organizations.”
But who owns and controls these resources? To answer this question, every nation has to make a decision about their national economic system.
Market economy is characterized “an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services”. It’s defined as a “liberal economic order which guarantees economic subjects freedom of contract and private property.”
Why do companies exist? Why is the state’s government requested to mainly observe and protect the market and not to intervene? And what are the perfect market and perfect competition?
To comprehend why the market economy
Adam Smith
1 Introduction
“We want water, we need water!” The Bolivian farmer is out of his mind; many like-minded citizens are staying next to him, yelling the same.
What is the reason for his anger? And what has happened to him and many other Bolivians?
In an article with the title “The drop on the hot market” the German author Jens Müller-Bauseneik explains the consequences of the privatization of the water supply in Bolivia in the year 1999, which went utterly wrong. The private company Bechtel Enterprise Holding tried to realize more profit.
In today’s world nearly every country’s system is the market economy – but why has this economic system achieved the leading role in our global world?
It’s my concern to explain “What factors constitute the basis of the market economy?” by investigating various trustworthy sources.
Economy is dealing with the “satisfaction of human needs”.
Natural limitation of resources and goods, called “scarce resources”, lead to a tension between unlimited demand and limited availability.
Every nation has to decide on a system for “allocating and its resources among its citizens, both individuals and organizations.”
But who owns and controls these resources? To answer this question, every nation has to make a decision about their national economic system.
Market economy is characterized “an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services”. It’s defined as a “liberal economic order which guarantees economic subjects freedom of contract and private property.”
Why do companies exist? Why is the state’s government requested to mainly observe and protect the market and not to intervene? And what are the perfect market and perfect competition?
To comprehend why the market economy
Bibliography: Adam Smith (1776) The wealth of nations 2 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 3 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 4 Günter Wöhe (2008) Einführung in die Allgemeine Betriebswirtschaftslehre, 23rd Edition 5 N. Gregory Mankiw (2007) Principles of Economics, Fourth edition 6 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 7 Eduard Spranger (1950) Lebensformen 8 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 9 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 10 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 1 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 2 Leon Walras (1874) Eléments d 'Économie Politique Pure 3 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 14 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 5 Prof. Dr. Markus Peter (2009) Script „Einführung in die internationale BWL“; Hochschule Aalen 16 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 17 N. Gregory Mankiw, Mark P. Taylor (2010) Economics 18 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 19 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 20 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 21 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 23 Prof. Dr. Markus Peter (2009) Script „Einführung in die internationale BWL“; Hochschule Aalen 25 R.H. Coase (1937) The Nature of the Firm 26 Prof. Dr. Markus Peter (2009) Script „Einführung in die internationale BWL“; Hochschule Aalen 27 N. Gregory Mankiw (2004) Grundzüge der Volkswirtschaftslehre 28 Prof. Dr. Markus Peter (2009) Script „Einführung in die internationale BWL“; Hochschule Aalen 29 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 30 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 31 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 32 Business Week (November 7, 2005) “The new Fed” 33 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey 34 Ronald J. Ebert, Ricky W. Griffin (2007) Business Essentials, Sixth Edition, New Jersey