Pros and cons of a market economy, reviews. Market freedoms of economic choice Economic vocabulary - the meaning of the word Freedom of choice

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Introduction

Economy The social science that studies the choices people make with limited resources to satisfy their desires.

As it becomes clear from the definition, the subject economic theory are not money or wealth, but people. Economics studies people, because rarity itself is a purely human phenomenon.

The second reason economics can be considered a science of people is that the choices it studies are refined in a social context. Therefore, economics is considered more of a social science than a branch of operational analysis, engineering, or mathematics.

Economic elections are taking place everywhere: in government offices that make political decisions, in non-profit organizations such as churches and student clubs, and in many other places and situations.

You yourself make economic choices, how you buy clothes or food, when you work, and so on.

All of the examples just given relate to the branch of economics called microeconomics. The prefix "micro" meaning "small" reflects the fact that this section of our subject studies choices made by small economic units. Although these units are "small", microeconomics still covers in its study many different problems of a truly global scale. For example, firms and government agencies carry out global trade in goods such as cars, chemicals, and crude oil. This trade and the policies that govern it are within the realm of understanding macroeconomics.

There is also another branch of economics called macroeconomics. The prefix "macro" meaning "large" indicates that this branch of theory studies large-scale economic phenomena. Typical microeconomic problems are how to create conditions in which people who are looking for work can find it; how to protect the economy from the harmful effects of a general increase in prices, called inflation; how to ensure continuous improvement of living conditions. Government policy regarding taxes, spending, budget deficits, financial system- these are the main topics of macroeconomics.

However, just as the macroeconomic phenomenon of inflation is the sum of millions of individual choices regarding the prices of particular goods and services, so the whole of macroeconomics rests on a microeconomic foundation.

Whether we consider micro or macroeconomics, internal or external economic relations- Anyway economic analysis requires a special way of thinking about how people make decisions about the use of scarce resources.

Each economic system faces the need to make certain basic choices. Among them, the most important are the following: what goods to produce, how they should be produced, who should do what work, and for whom the results of this work are intended. The necessity of each of these choices is dictated by the rarity of resources, and each specific choice can be considered for the purpose of explaining key points economic thinking.

1. Deciding what to produce

First major choice- what goods to produce. In the modern economic system, the number of goods and services created is enormous. However, the essential features of the choice of what to produce can be illustrated by the example of an economic system in which there are only two alternative goods. Enough goods and services cannot be provided to satisfy everyone's desires. Someone will have to choose in what quantities what product to produce.

The inability to produce as many goods as people would like is a consequence of the scarcity of the productive resources used to produce these goods. Even in order to produce the simplest products, we will have to combine many rare resources. For example, to make a table, we need wood, nails, glue, a hammer, a saw, the labor of a carpenter, a painter, and so on. For convenience, productive resources are usually divided into three main categories, which are called factors of production. Labor includes all the productive costs incurred by people in the course of their muscular and intellectual activity. Capital includes all those productive resources that are created by people: tools, machines, infrastructure, as well as intangible things, such as computer programs.

Natural resources- this is everything that can be used in production in a natural state, without processing, for example, fertile land, construction sites, forests, materials.

Productive resources used in one place cannot be used in another place at the same time. Steel, concrete and construction sites used to build a factory can no longer be used to build a school. People working as teachers cannot work on the assembly lines of automobile factories. Even the time that students spend in classrooms preparing for exams could be a productive resource if students instead of studying for exams were working in a factory. Since production uses resources that could be used elsewhere, the production of any good entails the loss of the ability to produce another good. In economic terms, everything has an opportunity cost.

Opportunity cost a good or service is the value measured in terms of the lost opportunity to engage in the best available alternative activity requiring the same time or the same resources.

More typical, however, is the situation in which we have many goods. In this case, having a large amount of one good means sacrificing a small amount of each of the other goods. In a system with many goods, the opportunity cost can be expressed in terms of a common unit of measure - money.

It is very convenient to have a common unit of measure, but the measurement of opportunity costs in money should be approached very carefully, because not all cash expenses represent a sacrifice of the opportunity to do otherwise. At the same time, not all of the sacrifices we make take the form of monetary costs.

Cash costs and opportunity cost are overlapping concepts. Some opportunity costs, such as tuition fees, take the form of cash costs, while others, such as lost earnings, do not show up as cash costs. Some of the cash costs, like tuition fees, are opportunity costs because the money could have been spent on something else. Other monetary costs, such as housing and meals, are not included in the opportunity cost of education, as a person must live somewhere and eat something, whether he is a student or not.

2. Deciding how to produce

Second major economic choice- how to produce. For almost any product or service, there are several ways to produce it.

Cars, for example, can be made in highly automated factories with a lot of capital equipment and relatively little labor, but they can also be made in small factories using a lot of labor and only a few machines. general purpose. The same can be said about education. Any subject can be taught in a small classroom where one teacher works at a blackboard with twenty students, but the same subject can be taught in a large lecture hall where the teacher uses monitors, projectors, computers to teach hundreds of students at the same time.

Efficiency is a key consideration when deciding how to produce. In everyday speech, the word "efficiency" means that production is carried out with minimal costs, effort and losses. Economists use a more precise term.

Economic efficiency (Pareto efficiency)- a state of affairs in which it is impossible to make a single change that more fully satisfies the desires of one person, without prejudice to the satisfaction of the desires of another person.

The definition itself is actually very close to the generally accepted concept of efficiency. If there is a way to improve your position without harming anyone, then it is pointless (inefficient) to pass by such an opportunity. For example, if I have a fountain pen that I use this moment I do not use, and you need this pen, then it would be foolish of you to buy your own pen. It would be much more efficient to lend you my pen; it improves your position and does not worsen mine. When there is a way to improve both sides, then not taking advantage of this opportunity is wasteful. You lend me a bike, I'll lend you a volleyball. If I don't ride a bike very often and you don't play volleyball very often, then it's not profitable for both of us to buy these things.

concept economic efficiency has many applications, one of which is the question of how to produce.

Efficiency in production- a situation in which, with given productive resources and the existing level of knowledge, it is impossible to produce more of one good without sacrificing the ability to produce some of the other good.

The concept of efficiency in production, as well as the broader concept of economic efficiency, includes the generally accepted meaning - the avoidance of losses. For example, an apple grower always strives to apply fertilizer in strictly defined quantities, no more than is required for each of the trees. Exceeding the dose is ineffective in the conventional sense of the word; after a certain point, increasing the amount of fertilizer no longer leads to an increase in the number of apples. It would be much better to use excess fertilizer in the production of, for example, peaches. In this case, more peaches will be produced without reducing the number of apples.

Scientific economic definition includes some more sophisticated opportunities to improve production efficiency in cases where the loss of resources is not so obvious.

When efficiency is achieved, more goods can be produced at the cost of losing the ability to produce something else if productive resources and knowledge remain unchanged. But over time, productive capacity can expand as a result of the accumulation of new resources and the invention of new ways to use these resources.

In the past, the discovery of new sources of natural resources has been an important way to expand productive capacity. Another source of growth was (and still is) population growth. However, when the most readily available sources of natural resources are exhausted, and population growth slows down, among the three classical factors of production, the importance of capital rises sharply, which now becomes the main source of expanding productive possibilities.

The increase in the amount of capital functioning in the economic system, that is, the increase in the supply of productive resources, carried out by people, is called investment. Investment means giving up current consumption in favor of future consumption. In order to build more factories, roads, computers, we are forced to withdraw resources from the production of bread, movies, services and other things that can satisfy our momentary desires. But at the same time, we are in a better position to satisfy tomorrow's desires.

The growth in the number of available factors of production is not the only source of economic growth. Equally important are changes in human knowledge - invention new technology, new forms of organization, new ways to meet needs. The process of finding new opportunities - introducing new ways of producing, being open to new perspectives, overcoming old limitations - all this is called entrepreneurship. It is a dynamic process that breaks down the barriers set existing level knowledge and suggestion factors.

Entrepreneurship does not necessarily mean inventing something or looking for a new business, although it often does. This phenomenon can also manifest itself in the search for a new market for an existing product. Every time you do something new, you are taking a step into the unknown. In that sense, you are also an entrepreneur. Entrepreneurship is so important that it is sometimes referred to as the fourth factor of production. However, such a comparison is not entirely valid. Unlike labor, capital, and natural resources, entrepreneurship is intangible and immeasurable. Even though entrepreneurs in the market are rewarded for their efforts, we cannot talk about the price of a "unit of entrepreneurship"; no such unit exists. Also, unlike human resources that age, machines that wear out, and natural resources that can be depleted, the inventions and discoveries of entrepreneurs are not consumed as they are used. If we once created a new product or concept, such as a transistor, a tube of toothpaste, or new form business, then we do not have to create this knowledge again (although, of course, they can be replaced by other, even better ideas). In short, it is much more convenient to think of entrepreneurship as a search the best way connection of the three main factors of production than to consider it a separate fourth independent factor.

3. Who should do what work

The question of what and how to produce arises even for a person living in isolation. Robinson Crusoe had to decide whether to fish or hunt birds, and if he was fishing, he had to decide what to use - a net or a fishing rod. Unlike Robinson's problems, economic issues about who should produce what, exists only in human society, and this is one of the reasons that economics is considered a social science.

The question of who should perform what kind of work is related to the organization of the social division of labor. Can every person be independent - a farmer in the morning, a tailor in the afternoon and a poet in the evening? Or people should cooperate - work together, exchange goods and services and specialize in various works? Economists answer this question on the basis that cooperation is more efficient. It allows anyone given number produce more people than if each of them worked alone. Three things make cooperation valuable: teamwork, learning by doing, and comparative advantage.

4. For whom to produce goods

Many economists draw a sharp line between issues of efficiency and equity. Efficiency discussions are seen as part of positive economics, which deals with facts and real dependencies. Debates about justice are part of normative economics, that is, the branch of science that makes judgments about whether particular economic conditions and policies are good or bad.

Normative economic theory is not only concerned with the problem of fairness in the distribution of the product. Value judgments are also possible about the remaining three main types of choices made by the economic system.

Positive theory analyzes the operation of the economy, the impact of certain institutions and political actions on the economic system. Positive science traces the connections between facts, looking for measurable patterns in ongoing processes.

Most economists regard positive theory as their primary and main occupation; but normative considerations do influence the development of positive science. The most significant influence is exercised in the field of choosing topics that are recognized as particularly important for research. The economist who sees excessive unemployment as an injustice will, of course, begin to study this problem; if a scientist sympathizes with the victims of discrimination, then he can also do research on this topic. In addition, normative beliefs often influence considerations about the veracity of information, and so on. At one time it was believed that a purely positive economics can develop quite independently of normative judgments of values ​​and justice. All disputes can be resolved in positive terms, on the basis of an appeal to objective facts. Today, this view is gradually losing popularity. However, it remains important that most of the major economic problems, especially those related to government policy, includes both a positive and a normative component, and it must be understood that each of these components affects our thinking.

Conclusion

economic resource personnel consumer

For an economy to function, it must have some way of coordinating the choices of millions of people about what to produce, how to produce, who should do what work, and for whom the product is made. There are two ways in which coordination occurs: a spontaneous order, in which individuals adjust their actions to conditions based on the information and stimuli of their immediate environment; the second way is a hierarchy in which individual actions are subordinated to the instructions of the central authority.

In economic theory, the main example of the operation of a spontaneous order is the coordination of decisions in the process of market activity.

Market is any interaction that people enter into to trade with each other. Organizational spectrum modern markets very wide: wholesale and retail markets consumer goods; world markets for thousands of goods and services. Despite the wide variety of forms, all markets have one common feature: They represent the information and stimuli that people need to make decisions.

In addition to knowing how to make the best use of a resource, people also need incentives to act on that information. Markets, with the help of prices, provide powerful incentives for the sale of goods and productive resources exactly where this sale will take place at the highest price; price incentives also make people want to buy goods at low prices. Profit considerations force managers to improve production methods and develop products that meet the needs of consumers. Workers who work where they are most productive and do not miss new opportunities get the highest wages. Consumers who are well informed and spend their money prudently live more comfortably on a given budget.

Used Books

1. Market: A Microeconomic Model, Edwin J. Dolan, David E. Lindsey, St. Petersburg, 1992. - 492s.

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Everyone understands what freedom is - the ability to successfully operate life. However, what is the economic freedom that is becoming more and more attractive in the 21st century?

Among the main features, it is supposed to replace external restrictions with internal conventions. At the same time, freedom in the economy has serious advantages and disadvantages at the same time.

What is economic freedom?

Economic freedom is required for any entrepreneurial activity. Based on the classical theory of capitalism, one can expect that the market will be a self-regulating system. However, this process becomes possible only if the absence of external control is assumed and conditions of complete freedom are guaranteed.

An entrepreneur must independently choose directions for his activities, trying to understand what is closest to him. In addition, he must independently install optimal cost for the offered product. State authorities should only monitor compliance with the laws of the Russian Federation and antitrust regulations. It is these ideas and concepts economic freedom began to develop actively in the 17th century.

What is the essence of economic freedom?

In order to understand the essence of economic freedom, one must be guided by the position of supporters of non-interference of statesmen in market processes. It is assumed that each person strives for a worthy benefit. For this reason, if only a reasonable choice is required for maximum profit, then the approach must be appropriate.

Competition and economic freedom should allow entrepreneurs to understand which business strategy is the most worthy and appropriate for a particular situation. It is important to understand that if there is a shortage of goods of a certain category on the market, someone will definitely offer products in the right quantity. With an excess of goods, weak producers will go bankrupt. Taking these factors into account, care must be taken to make a worthy choice, taking into account the existing opportunities.

Benefits of free choice in the economy

Economic freedom is the basis of effective entrepreneurial activity. For this reason, the important benefits of the proposed activity must be understood.

  1. For getting optimal size profit must be guided by effective development plans not only for the state, but also for business. Only if the principles in force are followed can maximum success be guaranteed.
  2. Economic freedom helps reduce unwanted risks. Moreover, this advantage, first of all, is manifested in countries with an unstable economic system. Only if the entrepreneur bears a certain responsibility for his actions can one count on the maximum success achieved in business.
  3. Economic freedom guarantees the possibility of successful planning for many entrepreneurs, but it must be understood that this will not always benefit the economy.
  4. An entrepreneur can engage in activities that will guarantee the maximum level of profit at minimum costs and risks.
  5. There is the possibility of making any decision in the conduct of legitimate business. Only the entrepreneur can decide how he should act to achieve the desired results.
  6. Economic freedom of choice should be based on the desire to help each other. Only in this case a high level of labor efficiency is guaranteed.

Disadvantages of Economic Choice

  1. State authorities must control the activities of entrepreneurs. Otherwise, there is a risk of systematic violations current legislation Russian Federation.
  2. If complete economic freedom is achieved, there is a risk of a large number merchants. It should be noted that this is exactly what happened during the collapse of the Soviet Union.
  3. Complete economic freedom assumes that the country will follow the path natural regulation. As a result, in a few years the economy will be completely destroyed.
  4. In the absence of any regulation, there are serious risks for any country: the industry of the state can be practically destroyed, Agriculture- stopped in its development, science - thrown back. Moreover, it will take a long time to restore the situation in the country. At the same time, developmental delay high technology can never be compensated.
  5. A high level of competition and complete economic freedom can lead to disastrous consequences. The state should perform a regulatory function in the economy.

State regulation should not be prohibitive. The only task is to prevent violations of the current legislation, which is general and binding on all. With a reasonable credit policy, proper improvement of legislation, competent tax activities, economic freedom and social responsibility can exist with each other.

Everyone understands what freedom is - the ability to successfully operate life. However, what is the economic freedom that is becoming more and more attractive in the 21st century?

Among the main features, it is supposed to replace external restrictions with internal conventions. At the same time, freedom in the economy has serious advantages and disadvantages at the same time.

What is economic freedom?

Economic freedom is required for any entrepreneurial activity. Based on the classical theory of capitalism, one can expect that the market will be a self-regulating system. However, this process becomes possible only if the absence of external control is assumed and conditions of complete freedom are guaranteed.

What is the essence of economic freedom?

In order to understand the essence of economic freedom, one must be guided by the position of supporters of non-interference of statesmen in market processes. It is assumed that each person strives for a worthy benefit. For this reason, if only a reasonable choice is required for maximum profit, then the approach must be appropriate.

Competition and economic freedom should allow entrepreneurs to understand which business strategy is the most worthy and appropriate for a particular situation.

It is important to understand that if there is a shortage of goods of a certain category on the market, someone will definitely offer products in the right quantity. With an excess of goods, weak producers will go bankrupt.

Taking these factors into account, care must be taken to make a worthy choice, taking into account the existing opportunities.

Benefits of free choice in the economy

Economic freedom is the basis of effective entrepreneurial activity. For this reason, the important benefits of the proposed activity must be understood.

  1. To obtain the optimal amount of profit, it is necessary to focus on effective development plans not only for the state, but also for business. Only if the principles in force are followed can maximum success be guaranteed.
  2. Economic freedom helps reduce unwanted risks. Moreover, this advantage, first of all, is manifested in countries with an unstable economic system. Only if the entrepreneur bears a certain responsibility for his actions can one count on the maximum success achieved in business.
  3. Economic freedom guarantees the possibility of successful planning for many entrepreneurs, but it must be understood that this will not always benefit the economy.
  4. An entrepreneur can engage in activities that will guarantee the maximum level of profit at minimum costs and risks.
  5. There is the possibility of making any decision in the conduct of legitimate business. Only the entrepreneur can decide how he should act to achieve the desired results.
  6. Economic freedom of choice should be based on the desire to help each other. Only in this case a high level of labor efficiency is guaranteed.

Disadvantages of Economic Choice

  1. State authorities must control the activities of entrepreneurs. Otherwise, there is a risk of systematic violations of the current legislation of the Russian Federation.
  2. If you achieve complete economic freedom, there is a risk of a large number of merchants. It should be noted that this is exactly what happened during the collapse of the Soviet Union.
  3. Complete economic freedom assumes that the country will follow the path of natural regulation. As a result, in a few years the economy will be completely destroyed.
  4. In the absence of any regulation, there are serious risks for any country: the industry of the state can be practically destroyed, agriculture - stopped in its development, science - thrown back. Moreover, it will take a long time to restore the situation in the country.

    At the same time, the lag in the development of high technologies will never be compensated.

  5. A high level of competition and complete economic freedom can lead to disastrous consequences. The state should perform a regulatory function in the economy.

State regulation should not be prohibitive.

The only task is to prevent violations of the current legislation, which is general and binding on all. With a reasonable credit policy, the correct improvement of legislation, and competent taxation, economic freedom and social responsibility can exist with each other.

Market economy freedom of choice of types and forms of activity

INTRODUCTION 3

1 Market economy: freedom to choose types and forms of activity 4

2Equality of forms of ownership in a market economy 6

3 Business independence and principles

functioning of the market 7

4 How the market answers the fundamental questions of economics 8

CONCLUSION 17

LISTS OF USED SOURCES 18

INTRODUCTION

Today, the acute problem of our state is its role in the economic system. There is also a serious problem - the development of its market and the expansion of the economy.

The market economy, which is based on the economic freedom of economic entities, regardless of the form of ownership of their economic involvement in rational management, to a large extent allows society to realize the strengths of commodity production and the market in the interests of socio-economic progress.

It creates an optimal (although not absolutely the best in economic and social terms) system for attracting effective, proactive and responsible economic behavior.

In a market economy, the latter, if not imposed, is primarily economic methods. People and collectives are guided by their own interests and forces, and they themselves are responsible for the negative consequences of management.

This makes you vigilant about resources, proactive, active, resourceful economic activity.

At the same time, the market economy is rather rigid in social terms, it does not allow equalization and containment, excludes the possibility of an equal distribution of income and wealth of society, and therefore is characterized by chronic social instability.

The market economy is characterized by irrational use of resources, a vivid manifestation of which are economic crises with their devastating impact on the production forces created by society, an increase in underutilization of production capacities and unemployment. But it is impossible to provide a more decent standard of living for all members of society without a transition to a socially oriented market, as most economists and practitioners in Kazakhstan now admit.

1 Market economy: freedom to choose types and forms of activity

The market is a complex economic system of social relations in the field of economic reproduction. It is due to several principles that determine its essence and distinguish it from other economic systems.

These principles are based on the freedom of man, his entrepreneurial talents and on the fair treatment of them by the state. Indeed, there are few of these principles - they can be counted on the fingers of one hand, but their importance for the concept itself market economy hard to overestimate.

Moreover, these foundations, namely: the freedom of the individual and fair competition, are very closely related to the concept rule of law. The same guarantees of freedom and fair competition can only be given in the conditions of civil society and the rule of law.

But the very essence of the rights acquired by a person under the rule of law is the right to freedom of consumption: every citizen has the right to arrange his life the way he imagines, within the framework of his financial capabilities.

It is necessary for a person that the rights to property be inviolable, and in this protection of his rights he himself plays the main role, and the state assumes the role of protecting against illegal encroachments on the property of a citizen of other citizens. Such a balance of power keeps a person within the framework of the law, since ideally the state is on his side.

A law that is beginning to be respected, whatever it may be, becomes just, at least for the one who respects it. But, protecting the rights of citizens, the state should not cross the border of both totalitarianism and chaos. In the first case, the initiative of citizens will be restrained or manifested in a perverted form, and in the second, the state and its laws can be swept away by violence.

However, the "distance" between totalitarianism and chaos is quite large, and in any case the state must play its "own" role. This role is to effectively regulate the economy. Regulation should be understood as a very wide range of measures, and the more effective its use, the higher the credibility of the state.

The market economy itself as a mechanism for regulating economic relations is only a scientific abstraction, a simplified model for demonstrating the principle of its functioning and comparison with existing forms of the so-called mixed economy. In a market economy, all the principles stipulated by it are fully implemented.

Although the market economy is a multi-valued concept, its main feature can still be distinguished. This is the principle of freedom of economic activity.

Naturally, economic freedom, like political, social, spiritual, moral, is limited by socially established limits that do not allow it to turn into anarchy, turn into a means of unbridled economic arbitrariness. Without a system of social restrictions, the freedom of some will become dominance for others.

But at the same time, the presence of restrictions does not indicate that, under the conditions of their operation, freedom is enclosed in a predetermined framework. The whole question is what level of restrictions.

By narrowing the restrictions, it is possible to reduce the zone of economic freedom to zero, and by expanding the free economic space, it is possible to make it, even if there are restrictions, not restricting economic activity, initiative, and entrepreneurship.

The main principle of a market economy declares the right of any economic entity, whether it be a person, family, group, collective of an enterprise, to choose the desired, expedient, profitable, preferred type of economic activity and carry out this activity in any form permitted by law. The law is designed to limit and prohibit those types of economic and economic activities that pose a real danger to the life and freedom of people, social stability, and are contrary to moral standards. Everything else should be allowed both in the form of individual labor and in its collective and state forms of activity. Thus, the following initial principle operates in a market economy: "Each subject has the right to choose for himself an arbitrary form of economic, economic activity, except for those prohibited by law, due to their social danger."

2Equality of forms of ownership in a market economy

It should be noted that the principle of universality is also implemented in the market. It determines the complexity market economy where there should be no structures that do not use commodity-money relations, which are the most important attributes of the market in the economy.

The defining principle of a market economy is also the equality of market entities with different forms of ownership.

This principle says: the economic rights of each of these subjects, including the possibility of carrying out economic activities, restrictions, taxes, benefits, sanctions, must be adequate for all subjects.

In the sense that they do not depend on the form of ownership that exists in a given enterprise.

Naturally, equality or, better to say, the adequacy of the rights of enterprises with different forms of ownership should not be perceived as absolute equality, sameness, indistinguishability. Different forms of ownership by themselves, willy-nilly, create different production and economic possibilities.

In addition, it is not rational to have the same rules, say, of taxation for enterprises with large and small teams and private individuals. We are talking about something else: not to create "special" conditions of a special favorable treatment on the basis of the form of ownership, placing an advantageous position on one of them and disadvantageous on the other.

In essence, this is a prerequisite for fair competition between different forms of ownership. The second, no less important side of the declared principle is to grant all forms of property the right to exist, the right to be represented in the economy.

Here we have in mind, first of all, the elimination of genocide in relation to private, family, group ownership of the means of production, which was so characteristic of the Soviet economy in the recent past.

3 Independence of management and principles of market functioning

It has already been said about independence in the choice of forms and types of activity, but this should be added: a market economy is characterized by self-regulation processes that extend not only to the management of an enterprise, but also to its creation and liquidation.

Moreover, unlike the conditions of the state economy, within the framework of the market, enterprises are independent of various kinds of state directives, and ideally, they depend only on the financial condition of the enterprise itself.

So, on the basis of the listed fundamental principles, the entire market economic system functions.

To understand how a market economy works, one must recognize the existence of five fundamental questions that every economic system must answer. Here are the questions.

    How much should be produced? To what extent or what part of the available resources should be borrowed or used in the production process?

    What should be produced? What set of goods and services will most fully satisfy the material needs of society?

    How should these products be produced? How should production be organized? Which firms should carry out production and which production technology should be used?

    Who should receive this product? In particular, how should production be distributed among individual consumers?

    Is the system capable of adapting to change? Can the system make adequate adjustments to changes in consumer demand, resource supply, and production technology?

All these questions exist only because the needs of society are unlimited, and the resources that can satisfy these needs are limited.

4 How the market answers the fundamental questions of economics

Economic dictionary - the meaning of the word Freedom of Choice

the free right of the owner to use the available resources and money at his own discretion; the free right of workers to choose the place and type of labor at will; free right of consumers to spend their

income for own needs.

Watch value Freedom of choice in other dictionaries

Freedom 1- independence will

Synonym dictionary

Freedom 2- will
Synonym dictionary

Freedom 3- freedom of freedom expanse

Synonym dictionary

Liberty- and. freedom of the south app. sowing freedom east. sowing own will, space, the ability to act in one's own way; lack of constraint, bondage, slavery, submission to someone else's will. concept……..
Dahl's Explanatory Dictionary

Liberty- freedom, w. 1. only units the possibility of the subject's manifestation of his will (see will in 1 meaning; philosophic). – Engels says: “Hegel was the first to correctly present the relation of freedom……..
Explanatory Dictionary of Ushakov

Liberty- Independence, sovereignty; lack of oppression, prohibitions, restrictions; the opportunity to do as you please. Absolute, shoreless, limitless, unconditional,……..

Dictionary of epithets

Without Choice Adv. Razg.- 1. Indiscriminately, in a row.
Explanatory Dictionary of Efremova

Freedom J.- 1. The absence of political and economic oppression, constraints and restrictions in public life. 2. State independence, sovereignty. 3. Absence of a fortress……..
Explanatory Dictionary of Efremova

Glasnost and Freedom of Speech (Press)- - one of the fundamental human rights, consisting in the legal right and the real opportunity for each person to publicly express their opinion on topical issues of public……..
Political vocabulary

Right to Choose- - the natural right of every person, declared in democratic states, to freely choose representatives to public authorities………
Political vocabulary

Liberty- - independence of social and political subjects (individuals, their groups, socio-political bodies, organizations and associations, etc.), expressed in their……..
Political vocabulary

Freedom of Religion- - one of the fundamental freedoms in civilized states. Other states declare this concept in order to appear more civilized in the eyes of the world community………
Political vocabulary

Freedom of Activity- (FREEDOM OF MOVEMENT). In Rotter's theory - a large freedom of activity reflects the expectation of a person that this or that behavior will lead to success, while a small freedom of activity ...... ..
Political vocabulary

Freedom of Information- - in constitutional law, a concept that covers a whole group of rights and freedoms: freedom of speech (freedom of expression), freedom of the press and other means mass media,……..
Political vocabulary

Freedom of the press- - one of the oldest constitutionally enshrined personal human rights and political rights of citizens, which is an integral part of more common law– freedom of expression……..
Political vocabulary

Freedom Political- - a natural quality that is inalienable from a person, social communities of people, allowing them to express their thoughts and actions in accordance with legal norms, interests ...... ..
Political vocabulary

Freedom of speech- - one of the fundamental freedoms declared in democratic societies. It is believed that with freedom of speech, anyone can express their thoughts in the quantity and quality……..
Political vocabulary

Freedom of conscience- - an ephemeral concept, which consists in declaring a hypothetical freedom to do everything at one's own discretion, without feeling remorse. High-pitched……..
Political vocabulary

Rational Choice Theory- - according to its basic provision, the main subject of political participation is a free individual striving for the maximum realization of his interests and effectively……..
Political vocabulary

Liberty- -s; g.1. The absence of political and economic oppression, the absence of constraints, restrictions in the socio-political life of society. C. manifestations. Political……..

Explanatory Dictionary of Kuznetsov

Associations Freedom- - see RIGHT TO EAT. NENIE
Law Dictionary

Liberty- A common Slavic word that goes back to the same basis as feature, person, own.
Etymological Dictionary of Krylov

Treaty Freedom- - see PRINCIPLE OF FREEDOM OF CONTRACT.
Law Dictionary

Grounds for restriction of freedom of movement, choice of place of stay and residence- - position federal law on the admissibility of restricting the right of citizens to freedom of movement, choice of place of stay and residence in strictly defined areas……..
Law Dictionary

Sexual Freedom- - freedom of sexual self-determination of a person, i.e. the right to independently and without coercion choose sexual partners, a form of intimate relationships. Unlike sexual……..
Law Dictionary

Right to Choose a Pension- - according to the pension legislation of the Russian Federation, the possibility of a citizen who simultaneously has the right to various state pensions to choose one of them.
Law Dictionary

Liberty- - enshrined in the constitution or otherwise legislative act the possibility of certain human behavior (eg, freedom of speech, freedom of religion, etc.). Category……..
Law Dictionary

Freedom of Association- - see Right to association.
Law Dictionary

Freedom of Religion- - one of the fundamental personal freedoms of a person, including the right, individually or jointly with others, to profess any religion, to freely choose, have and distribute ...... ..
Law Dictionary

Freedom of choice- -1) the free right of the owner to use the available resources and money at his own discretion; 2) the free right of workers to choose the place and type of labor at will;……..
Law Dictionary

See the Wikipedia article for Freedom of choice

Economic freedom, its forms and types

Definition 1

Economic freedom is the economic behavior of economic entities in the process of choosing forms of ownership and the application of their own capabilities and abilities, knowledge and skills.

Economic freedom is realized through legislative forms state, while its important feature is its inseparability from economic responsibility.

Adam Smith named the basic conditions for the prosperity of the state and its citizens:

  • perfect legislation,
  • Unburdenable level of taxes,
  • The main components in the canonical definition of freedom of economic activity.

Remark 1

In the modern sense, the economic freedom of entrepreneurship consists in free production, trade, savings, investment, use of what is created and earned, establishing contacts with domestic and foreign enterprises, using any monetary units.

Success in the development of entrepreneurial activity depends on the efficiency of the market economy, which should be based on the principles of the market, freedom of entrepreneurial activity, etc.

Can not understand anything?

Try asking teachers for help.

An important role in the effective functioning of a market economy and the development of entrepreneurship is played by legislative support unhindered implementation of the relevant principles. At the same time, the most important functions of legal support are:

  • Formation of relevant legal acts in order to support the basic conditions for the operation of the market,
  • Economic freedom and price competition,
  • Formation and provision of certain rules for the relationship of market entities.

Forms of ensuring economic freedom

The economic freedom of consumers and producers can be more effectively ensured through the institution of private property, which functions on the basis of existing laws.

The main guarantor of the implementation of laws is represented in our country by the Constitution, which includes the wording of the regulation of property rights. Thus, in our country municipal, state and private views property.

IN modern conditions The state has significant but limited economic resources in order to fully achieve their goals and interests.

The goal of the state is represented by the expansion of the range of social functions of entrepreneurial activity.

This can be achieved through legally regulated means in the field of implementation of social functions in the country.

On the other hand, the achievement is possible through the construction by state structures of an effective mechanism that can stimulate entrepreneurial activity this direction.

Types of Economic Freedom

Economic freedom can be expressed in the freedom of consumer choice.

Consumer behavior is the process of forming consumer demand. Consumers make a choice of goods taking into account prices and personal budget, which includes their own cash income.

The basis of consumer choice is the desire of the consumer to satisfy a certain need.

Each person has his or her own preferences, and these individual preferences are summed up with the help of market demand, since buyers can express own desires through the distribution of income among a variety of products and services, determining prices and market supply.

Remark 2

This ability of consumers to influence producers is called consumer sovereignty, which is represented by the ability of consumers to influence producers through the free choice of market goods.

The freedom of consumer choice is an important form of economic freedom, while its restriction can deprive buyers of the opportunity to purchase specific goods on the market and affect production. Decisions made through the administrative method most often lead to a crisis.

Freedom of choice is often distorted as a result of several situations:

  • the following of the buyer for the majority of consumers, which is expressed in the effect of joining the majority or the imitation effect,
  • the desire of the buyer to stand out from the general crowd, that is, the snob effect,
  • persistent demonstration of prestigious consumption, expressed in the Veblen effect or the effect of demonstrating one's exclusivity.

Despite the presence of acceptability from the standpoint of society and the need for their adjustment, in economic theory it was assumed that the individual in his consumer behavior most often behaves reasonably.

The hypothesis of rational behavior of consumers is characterized by the fact that they strive for the most efficient disposal of their funds. The abstract, ideal person corresponding to this hypothesis is called “economic person” in economics.

Analysis of consumer behavior is characterized by knowledge of the criteria that he uses in his own free choice. This criterion is mainly represented by the utility of a good, which is a measure of the satisfaction provided by the consumption of a particular good.

At the same time, in the course of consumption, the utility of the goods tends to decrease. The marginal utility of a particular good is the increase in the total utility of a set of goods with an increase in the consumer's quantity of the good by one unit. This concept is related to 2 economic laws Gossen.

The first law is called the law of diminishing marginal utility. In accordance with it, each continuous act of consumption is characterized by a decrease in the utility of each subsequent unit of consumed goods.

In accordance with the second law, the utility maximization rule is formed. So, to obtain maximum utility from a certain amount of goods, each of them must be consumed in an amount at which the value of the marginal utility of each product will be equal to the same value.

The principles according to which the consumer shows preference or indifference to a certain set of goods can be defined as consumer axioms of behavior.

Each student in the future sees himself as successful and prosperous, and ideally - not at all an office clerk with ordinary duties and certainly not a waiter or a salesman. However, dreams are dreams, and reality does not always turn out the way we want. Not everyone manages to find the perfect job and build a dizzying career. But everyone who is not afraid to make dreams come true can create a business in which it will be interesting for him to develop, and work for himself! There is nothing enough for this - to open an individual entrepreneur and, of course, to work and work.

Status Word: Pros and Cons

If working is not an easy task and requires a person to have many qualities, experience and knowledge that he should ideally receive in the process of learning, then opening an IP is a very simple matter, and this is precisely the beginning of a small business. According to the law, without registration of individual entrepreneurship, no private person has the right to conduct commercial activity. But registration of an individual entrepreneur not only gives you the right to organize your business as you want, but also allows you to rightfully consider Russian Entrepreneurship Day, which has been celebrated on May 26 since 2007, as your holiday. Though a trifle, but pleasant.

A significant difference in the status of an individual entrepreneur from, for example, a member of a company with limited liability in the fact that in which case an individual entrepreneur is liable for obligations with all his property, even personal - as they say, according to full program. But what a plus! Firstly, without registering your own enterprise, as soon as you receive the status of an individual entrepreneur, you will be able to manage your own revenue as you please. Secondly, all the problems associated with the creation and liquidation of a business are minimized here. It is not necessary to have legal address, bank account and authorized capital, there is no need to register with various funds. There is no need to pay tax on property that is somehow involved in commercial activities, you can make all decisions yourself without any meetings and protocols, and there is even the possibility (when engaged in certain types of activities) not to keep any income records.

However, you should not think that everything is so smooth - nevertheless, whatever one may say, we live in Russia. And the IP status has certain disadvantages, which it is better to know about in advance. We have already said about personal property, which, if something happens, creditors can take away from you. True, for this you still need to manage to acquire creditors. But that's not all. So, being individual entrepreneur, you will not be able to obtain some licenses - for example, you will not be allowed to sell alcohol and drugs. The possibility of doing business together here is excluded by itself. Deductions for social insurance go only on the basis of the minimum wage taken at the beginning of the corresponding year in the form of a fixed payment, even if there was no activity. And in general, IP does not work according to employment contract, but under a civil law contract with all the ensuing pluses and minuses.

Procedure: Lightweight

But the benefits are clear. Take at least the registration procedure, which in this case is simplified to a minimum. The only inconvenience is that you will have to register as an individual entrepreneur at permanent registration at the place of residence. Although this in no way interferes with doing business in any other region of the Russian Federation. But documents for personal filing do not need to be certified by a notary (this is an innovation in 2011) - and this saves time and money. In case of termination of business activity, it is enough to submit a certificate to electronic form. To register an individual entrepreneur, you need to have only four documents:

  • Statement of state registration individual entrepreneur;
  • Copy of the passport;
  • Document confirming the payment of the state fee;
  • TIN certificate.

Well, the registration procedure itself is not even necessary to go through personally - an authorized representative can appear on it by proxy with all the necessary documents (in this case, however, notarized). The documents will be taken away from you by issuing a receipt, which will indicate the date when you can take the papers back. If for some reason you cannot come for them within the specified time, it is not a problem: the documents will be sent to your home address. After registering an IP, you will receive everything Required documents, confirming your status: certificate of registration as an individual entrepreneur and USRIP (extract from the Unified state register individual entrepreneurs). However, more detailed information you can be given in any company engaged in consulting in such matters - for example, in the company MK Kadar, which provides accounting support and legal services. According to the company's specialists, an individual entrepreneur is the most convenient form for running a small private business. You probably already understand why.

Yes, becoming an individual entrepreneur means taking full responsibility for commercial activities: study the law yourself, deal with all expenses - from transport to the workplace and equipment, look for clients and customers, be responsible for all decisions and actions, and most importantly - work yourself. But - their money, their decisions, their activities (anything, as long as they do not violate the law), their work schedule, their workplace (at least work on the couch!), their conditions ... On the one hand - what a responsibility! On the other hand, what freedom! Given that firms such as MK Kadar are ready to take care of all the issues of registering an individual entrepreneur and are able to assist you in making decisions related to your business, this freedom is becoming more accessible and therefore more tempting. Good luck!

Hardworking - a bright light burns through life, lazy - a dim candle

Pros and cons of a market economy, reviews

The Problem of the Market Economy- This is a fairly global issue, which needs to be approached from different angles.

The market economy is the most famous topic of debate among the iconic economists of today. Their opinions are often completely opposite.

In practice, this issue implies a mixed type of economy, which provides for a minimum level of presence of the state apparatus, as well as maximum market influence.

If we talk about a market economy in this sense, then its advantages and disadvantages are most clearly visible.

The main features that characterize a market economy are: possibility of use and undivided ownership own capital, dispersal economic well-being, the priority of the personal initiative of producers and the minimum intrusion into this process by the state.


The advantages of a market economy are as follows:

  1. The market economy is considered one of the main engines of technological progress. This justification is quite understandable, because the high level of competition, which guarantees the good quality of the product, will not allow substandard goods(they simply can't stand the competition).
  2. For a market economy there are no concepts of scarcity, queues and commodity hunger. The supply in this case is determined by the demand for the product, so all manufactured products are in demand.
  3. Efficient and reasonable use production resources . The commodity producer should be most concerned with the process of minimizing cash deposits, so he directs the necessary resources precisely to those zones where they will give the highest return.
  4. Profit in this case will directly depend on the contribution and the level of work. If the entrepreneur does real contribution into its production, and takes care of creating a product demanded by consumers, then it will receive the maximum level of profitability. For those who competently organize work and own valuable resources, a market economy guarantees high profits.
  5. Complete economic freedom, which is expressed in entrepreneurial freedom, freedom to choose the category of buyers and sellers, freedom to transport a resource, install pricing policy etc.

The disadvantages of a market economy are:

  1. Little stability. The market economy is a cyclical system, and its constant dynamics, as well as inflation and underemployment, can undermine the entire established system.
  2. There is a tendency to monopolize the market. The market economy itself, in fact, can reduce competing forces. This pattern leads to monopolization and the possibility of collusion among firms.
  3. Inability to compensate for some external costs.
  4. The conditions of a market economy do not provide for the production of public goods. Impossible is the production of protection general order, national defense, fire safety and others. Also, this mechanism does not help to preserve the country's natural resources, and cannot regulate their use (we are talking about gas, oil, coal and other natural values).
  5. Thanks to the market economy, stratification of society. The resulting income differentiation contributes to social stratification.
  6. In a market economy, there is poor information content.
  7. Rising unemployment, the emergence of a number of social problems. These factors appear as a result of fierce competition. They may well undermine the stability in the country, cause significant social fluctuations and even undermine the credibility of the government in the country.

The market economy is a self-sufficient mechanism, the origins of which go back to ancient times. It was more popular many centuries ago and today is very effective.

The market economy is not devoid of disadvantages, among which are the differentiation of income, the inability to compensate for external costs, and so on.

Comparing all the pros and cons of this system, it can be noted that the market economy is not at all perfect, but, despite this, it guarantees a high level of product quality, the balance of supply and demand, and also regulates the presence of unscrupulous manufacturers on the market.

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