Byserdet27
What do market forms and supply and demand have in common? Unfortunately, I don't understand that…Centrally planned economies are also called planned economies. Is this simply government intervention?
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The various economic regulations – central administration, free market economy and social market economy – differ in the way the economy is organised. In a central administration economy, also known as planning, the state controls the means of production and makes central decisions on production and distribution. In contrast, the free market economy, in which supply and demand determine the market and the state only intervenes minimally. The social market economy combines elements of both systems by regulating the free market with social and state interventions to ensure social justice.
The full market is a theoretical model that presupposes certain conditions, such as complete information, homogeneous goods and no market power. In reality, these conditions are rarely fulfilled. Supply and demand are basic concepts that play a role in all economic regulations. Offer refers to the quantity of goods or services offered, while demand represents the quantity that consumers want to buy. The interplay of supply and demand determines the price and quantity traded on the market.
State interventions are very pronounced in central administration, i.e. the plan economy, as the state has control over the economy. In an open market economy, state interventions are minimal, while in the social market economy the state intervenes to achieve social goals and regulate the market. It is important to understand that each economic order has advantages and disadvantages and can function differently well depending on the context.
How does supply and demand control the market in the free market economy?
Supply and demand determine the price of a good in a free market economy. This price is a measure of the scarcity of the respective good. If it is short, the price increases and it will make it more profitable (incentive) to increase the offer again (price stabilises again). In a free market economy, resources are always economically shifted to the most profitable branches.
What about state intervention? How does he use what means? Lg.
As a rule, state intervention is a legal/political intervention in the economy. For example, if I sell you a stick for 5 €, and the state prevents this (forcibly) then that is a state intervention.
In the free market economy (also narrow “unhampered market” so “unimpeded market”) people exchange their goods in voluntary (and free) exchange. There is private property on the means of production and other scarce physical goods, so that everyone can “do what he wants”, which is expressed in free production and outdoor trade. Consequently, market prices and efficient division of labour are emerging in order to optimally satisfy consumers’ needs. It is essential for the existence of a free market economy that any aggressions against individual property rights are not tolerated, fought or even prevented.
In a plan economy (central management), or in the economy or in the economy. Socialism, there is no valid (de facto) special property on the means of production, on the contrary, state property (or common property) applies. The term is an unfree production and an unfree trade, because this (production and trade) is not made by individual decisions, but is directed by the state, a single entity. There are no market prices, which makes economic costing and therefore rational production impossible: The consequences are a disastrous and fragile economy, which often prefers the interests of certain groups of rulers to the interests of individual consumers.
The social market economy, i.e. interventionism (also known as a guided economy), is trying to form a central path between the free market economy and the common economy. Certain sectors of the economy are nationalized, property is not completely abolished, but regulated (it loses its “private” status). The prices are partly formed on the market and, on the other hand, strengthened by controls by the State. These also include wage limits, such as minimum wages and maximum wages. Production is partly free, but certain conditions are set to which producers must adhere. There are licenses and patents that keep competitors from the market. Taxes are levied, duties are taken against free trade and inflation is operated, the purchase of some services is voluntary, others are not. Private sector sectors are subsidised, others are sanctioned. Interventionism is a kind of indirect control of the economy, which can extend from moderate to a strict de facto socialism. The result is that the needs of consumers are met suboptimally, mismanagement happens at many corners, the division of labour and competition are hindered. Companies centralize to corporations, boom and bust cycles follow inflation, demand or supply overhangs or Shortages arise in price regulations. The right to property is not taken seriously, but is subject to the interests of the state.