Book: Yu. Mamedov. Modern economics. Page 5

Market competition is the struggle between sellers (for more favorable conditions of production, allowing them to maximize profits) and between buyers (for more favorable conditions of consumption, allowing them to maximize utility). As a result of competitive selection, those producers who manage to organize production effectively survive in the market.

There are a great many needs (personal and industrial, current and future), not all needs are solvent, not all solvent needs have an offer. The same with supply: there is no less a great variety of commodity values, not all of them meet the requirements of marketability, not all goods have effective demand.

Decreasing the market price by pleasing buyers and increasing their number

The mystery of the equilibrium point is that it can only be discovered on the market, after production, so not all producers will be able to sell the product they offer. The unpredictability of the equilibrium point, forcing producers and consumers to constant economic activity, is the origin of the life of the economy.

According to the law of demand, the impulse for the behavior of the consumer (buyer) is set by the supply price at which the manufacturer offers him his product. Of course, the supply price is only the initial, initial price of the product, which then collides with the demand price. that is, with the price that the consumer is able and intends to pay. Usually a compromise is reached between them in the form of the market price of the product at which it is actually bought and sold. The agreed market price is also called the equilibrium price because it is at the level when the seller agrees to sell and the buyer already agrees to buy.

The size and structure of supply reflect the tax policy of the state: the introduction, for example, of a value added tax stimulates the production of less labor-intensive products, and tax incentives can increase the supply of certain goods.

The amount of supply depends primarily on the level of competition in the industry. If supply exceeds the effective capacity of demand, then producers begin competition for buyers by reducing prices. But if there is insufficient supply, competition arises among the buyers themselves.

Supply, like demand, is an independent sphere of a market economy, with a special economic logic of behavior of its participants. Currently, it is customary to distinguish five groups of goods (services) in the proposal: raw materials (resources), capital goods (equipment), labor (hired), capital (productive and monetary), consumer goods, including durable products (refrigerators, televisions) , washing machines, clothes, furniture); non-durable products (food, cosmetics); services (actions during which a beneficial effect is achieved, for example, hairdressing salons, restaurants, tourism).

Determining the real state in which a company is in requires such a fusion of calculations and intuition that it is mainly done by theoretical economists, who condescendingly (and, as a rule, retroactively) explain to the management of a bankrupt company why they failed.

The only way to increase production efficiency is to reduce costs as much as possible.

A single market price allows you to receive a monetary gain (rent

The market is the establishment of a certain single price for a product that reconciles the interests (costs and income) of sellers and buyers. Consequently, that group of buyers whose monetary income would allow them to buy this product at a higher price than the established one will nevertheless purchase it at the equilibrium price. This means that the market structure of the economy benefits a group of highly profitable buyers, who receive an invisible monetary gain with each purchase. This is the so-called rent

The rise in price of any product will sooner or later be avenged in accordance with the law of demand - a decrease in the amount of demand (or, even worse for producers, a fall in demand itself).