# data[].attributes.body
Created by: Curt Zimmermann & Nathaniel Kelly

# data[].attributes.body
Markets have been around many years in the form of business markets, bartering, and vendors.  Markets follow the principle of trade. In order to have a market and economy is required to have buyers and sellers. Business marketing occurs when companies sell products or services to other companies and organizations who then resell them. A vendor is a person or company offering something for sale (i.e. a trader in the street). http://www.wordle.net/

# data[].attributes.body
A market is the process of buyers and sellers exchanging goods and services. Every market is different in the goods in services that are produced and the services offered but ALL markets facilitate trade. (Website #1)

# data[].attributes.attachment_link.title
Definition of Markets | What is Markets ? Markets Meaning - The Economic Times

# data[].attributes.attachment_link.description
Never miss a great news story! Get instant notifications from Economic Times Allow Not now

# data[].attributes.body
This video breaks down the basic fundamentals of how a market functions and how we interact in markets daily. A key point to remember in this video is that, buyers as a group determine the demand for a product and the sellers of a group determine the supply of a product. (Video #1)
https://www.youtube.com/watch?v=_ciGltfeeaQ

# data[].attributes.attachment_link.description
A market is a group of buyers and sellers of a particular good or service.

# data[].attributes.body
The market economy, otherwise known as the 'free market' is not controlled by the government, it more or less controls itself. Supply and demand are the most fundamental concepts within a market economy. Demand refers to the quantity of a desired product, whereas supplu refers to just how much of that product there is. (Picture #1) http://inesad.edu.bo/developmentroast/2012/08/you-cant-fire-your-land-how-the-humble-farmer-dethrones-free-market-economics/

# data[].attributes.body
The market where households sell their factors of production or scarce resources to firms. At the microeconomic level:

Households sell resources

Firms buy resources

The factor market facilitates production (i.e. labour, raw materials, capital and land). These resources are used by firms and companies in order to make finished products to sell.
(Picture #2) https://www.msci.com/www/blog-posts/understanding-factor-exposures/0858256064

# data[].attributes.body
https://www.youtube.com/watch?v=J0LigIdph8I

# data[].attributes.attachment_link.title
(THE LOST EPISODES) Factor Market Overview

# data[].attributes.body
The market for consumer goods and services. At the microeconimc level:

Households are buyers

Firms/Companies are sellers

Within the product market, households have money in the from of wages that they can buy goods and services with. Once goods and services are bought, money flows from household to firms creating a profit or revenue. The picture below explains how the product market flows. (Picture #3) https://www.tes.com/teaching-resource/macroeconomics-lesson-1-circular-flow-diagram-6242387

# data[].attributes.body
Two basic type of markets exists in all market economies:

Resource Markets

Product Markets

This video introduces the circular flow model of money, resources, goods and sevices within a market economy. It's important to understand the relationships between the government, buisnesses and individuals within both the resource and product markets. (Video #2) https://www.youtube.com/watch?v=_PKH2wtDT3E

# data[].attributes.attachment_link.title
The Circular Flow Model of a Market Economy

# data[].attributes.body
An economic system where goods and services are set freely. Countries with a free market economy are allowed to reach a certain point of equlibrium without government intervention. (Website #2)

# data[].attributes.attachment_link.readable_text
A market economy is a system where the laws of supply and those of demand direct the production of goods and services.﻿﻿ Supply includes natural resources, capital, and labor. Demand includes purchases by consumers, businesses, and the government.

Businesses sell their wares at the highest price consumers will pay. At the same time, shoppers look for the lowest prices for the goods and services they want. Workers bid their services at the highest possible wages that their skills allow. Employers seek to get the best employees at the lowest possible price.

Capitalism requires a market economy to set prices and distribute goods and services. Socialism and communism need a command economy to create a central plan that guides economic decisions. Market economies evolve from traditional economies. Most societies in the modern world have elements of all three types of economies. That makes them mixed economies.

Definition of a Market Economy

The following six characteristics define a market economy.﻿﻿

Private Property

Most goods and services are privately-owned. The owners can make legally binding contracts to buy, sell, or lease their property. Their assets give them the right to profit from ownership. There are some assets U.S. law excludes. Since 1865, for example, you cannot legally buy and sell human beings.﻿﻿

Freedom of Choice

Owners are free to produce, sell, and purchase goods and services in a competitive market. They only have two constraints. First is the price at which they are willing to buy or sell. Second is the amount of capital they have.

Motive of Self-Interest

Everyone sells their wares to the highest bidder while negotiating the lowest price for their purchases. Although the reason is selfish, it benefits the economy over the long run. This auction system sets prices for goods and services that reflect their market value. It gives an accurate picture of supply and demand at any given moment.

Competition

The force of competitive pressure keeps prices low. It also ensures that society provides goods and services most efficiently. As soon as demand increases for a particular item, prices rise thanks to the law of demand. Competitors see they can enhance their profit by producing it, adding to supply. That lowers prices to a level where only the best competitors remain. This competitive pressure also applies to workers and consumers. Employees vie with each other for the highest-paying jobs. Buyers compete for the best product at the lowest price.

System of Markets and Prices

A market economy relies on an efficient market in which to sell goods and services. That's where all buyers and sellers have equal access to the same information. Price changes are pure reflections of the laws of supply and demand. There are five determinants of demand: product price, buyer's income, prices of related goods, consumer taste, buyer's expectations.﻿﻿

Limited Government

The role of government is to ensure that the markets are open and working. For example, it is in charge of national defense to protect the markets. It also makes sure that everyone has equal access to the markets. The government penalizes monopolies that restrict competition. It makes sure no one is manipulating the markets and that everyone has equal access to information.﻿﻿

Advantages of a Market Economy

Since a market economy allows the free interplay of supply and demand, it ensures that the most desired goods and services are produced. Consumers are willing to pay the highest price for the things they want the most. Businesses will only create those things that return a profit.

Second, goods and services are produced in the most efficient way possible. The most productive companies will earn more than less productive ones.

Third, it rewards innovation. Creative new products will meet the needs of consumers in better ways that existing goods and services. These cutting-edge technologies will spread to other competitors so they, too, can be more profitable. This sharing of knowledge illustrates why Silicon Valley is America's innovative advantage.

Fourth, the most successful businesses invest in other top-notch companies. That gives them a leg up and leads to increased quality of production.﻿﻿

Disadvantages of a Market Economy

The key mechanism of a market economy is competition. As a result, it has no system to care for those who are at an inherent competitive disadvantage. That includes the elderly, children, and people with mental or physical disabilities.

Second, the caretakers of those people are at a disadvantage. Their energies and skills go toward caretaking, not competing. Many of these people might become contributors to the economy's overall comparative advantage if they weren't caretakers.

That leads to the third disadvantage. The human resources of society may not be optimized. For example, a child who might otherwise discover the cure for cancer might instead work at McDonald's to support her low-income family.

Fourth, society reflects the values of the winners in the market economy. A market economy may produce private jets for some while others starve and are homeless. A society based on a pure market economy must decide whether it's in its larger self-interest to care for the vulnerable.﻿﻿

How the Constitution Protects the U.S. Market Economy

The United States is the world's premier market economy. One reason for its success is the U.S. Constitution. It has provisions that facilitate and protect the market economy's six characteristics. Here are the most important:

Article I, Section 8, protects innovation as property by establishing a copyright clause.

Article I, Sections 9 and 10, protects free enterprise and freedom of choice by prohibiting states from taxing each other's goods and services.﻿﻿

Amendment IV protects private property and limits government powers by protecting people from unreasonable searches and seizures.﻿﻿

Amendment V protects the ownership of private property.﻿﻿ Amendment XIV prohibits the state from taking away property without due process of law.﻿﻿

Amendments IX and X limit the government's power to interfere in any rights not expressly outlined in the Constitution.﻿﻿ ﻿﻿

The Preamble of the Constitution includes a goal to "promote the general welfare."﻿﻿ The government could take a larger role than what a market economy prescribes. This expansionary governmental role led to many social safety programs, such as Social Security, food stamps, and Medicare.

# data[].attributes.attachment_link.title
How the U.S. Constitution Protects America's Market Economy

# data[].attributes.attachment_link.description
A market economy is a system where the laws of supply and those of demand direct the production of goods and services.﻿﻿ Supply includes natural resources, capital, and labor. Demand includes purchases by consumers, businesses, and the government. Businesses sell their wares at the highest price consumers will pay.

# data[].attributes.body
Markets are important because they contribute to building an economy. This is a good website to visit because, it provides a plethora of information on the topic. If someone has no idea what a market is, they could visit this website and receive the information needed to understand this topic and, why it is important. (Website #3)

# data[].attributes.attachment_link.title
Why Markets Are Important (And What They Could Do for Public Education) - Education Week

# data[].attributes.attachment_link.description
Denis P. Doyle comments on the heavy hand of tradition and the lack of entrepreneurial vitality in the education realm.

# data[].attributes.body
In conclusion, almost everything in todays economy has a market structure. Prices of goods and services are consistently changing, interest rates are constantly fluctuating, and all opportunities are a cost. The following characteristics best define a market economy:

Private Property

Freedom of Choice

Self-Interest

Competition

System of Markets

Government

In free markets, owners are free to buy, sell and produce goods and services at their own free will. In most cases, everyone sells their 'shares' to the highest bidder at the lowest price, bargaining to benefit the economy in the long run. As soon as the demand for a product increases the prices are forced to increase, thus referring to law of demand. A market economy relies on an effieciently run market system. The role of the government in a market structure is to ensure markets are open and effective.