There are two main types of economic systems, one is the planned economy, which believes that only the best can develop the economy in a way that promotes the overall social welfare, so it is up to the best to determine production and consumption; The other is the market economy, which believes that it can guide the economy to develop in a direction that is conducive to the whole society, so it is up to enterprises and households to decide on production and consumption. Article 6 of the Ten Principles of Economics supports the market economy, arguing that the market is often a good way to organize economic activity.
Hello leek friends, I'm Duan Fei, a chubby uncle who doesn't read much and knows a little about finance and economics
First of all, the core of the market economy lies in the first mechanism, which is like an "invisible hand", which can automatically adjust supply and demand. When there is an oversupply of a certain commodity in the market, ** will naturally decline; Conversely, if the supply is less than the demand, it will. In this way, the market can automatically adjust the allocation of resources to achieve maximum use of resources.
Secondly, the market encourages competition and can stimulate the innovation vitality of enterprises. In the fierce market competition, enterprises must continue to innovate, improve efficiency, reduce costs, and provide more diversified, better and more affordable products and services, which will ultimately benefit the majority of consumers. In this way, the level of productivity of the whole society will be raised, and economic development will be healthier.
Thirdly, the market is able to reduce transaction costs. In a market economy, enterprises and households make their own decisions about production and consumption, and the mechanism can provide timely and accurate information to help buyers and sellers reduce transaction costs.
In summary, the market economy is often a good way to organize economic activities because it can automatically regulate supply and demand, stimulate the innovation vitality of enterprises, reduce transaction costs and promote resource allocation. Of course, the market is not omnipotent, and it also has some defects and deficiencies, but as long as the market mechanism is rationally used and the market rules and regulatory system are constantly improved, we will be able to give full play to the greatest advantages of the market economy and benefit the whole society.
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