Market and its Functioning
Market is an instrument or mechanism which is function on the definite space where customers and sellers with different goods and services are cooperating to each other. Markets are differing from each other with the specific of goods and also services but with the freedom of choice for customer.
The main point in consideration of functions of the market is coming to the exposure of regularity of forming prises for goods and services under the influence of supply and demand.
Law of demand
Demand is forming by the customer which determines the structure and amount of bought products with definite prise in the definite period of time. That means the demand is forming from many factors. p> One of characteristics of demand is an interrelationship between prise and amount of demand. When the prise goes up, as a rule, the demand goes down and vice versa when the prise goes down demand goes up. This interrelation is formed as a law of demand. This law is formed with next factors: the first factor: for the customer prise is some sort of barrier which doesn't let him to by the good he planned. Low prise for good is stimulating to buy it and high prise restrains from buying. The second factor: there is an effect of the income and of its real use. The high prise for one of the goods can be compensated with the purchase of other good with lower prise which is able suitable replace the first good. The effect of income is showing that when the prise is lower the costumer is able to buy more of given good and not rejecting himself from buying some of alternative goods. p> Beside the prise there are other factors which influence on the average amount of demand. These factors are: preferences of costumer, changing of amount of costumers, the change of income, and change of prise of provide goods (Makarkin, 2006).
The law of demand has it practical meaning for sellers and customers in case if its influence has a quantitative meaning as soon as it influence on the exchange of productivity and on the amount of possible expenses of costumers. The law of demand has its reflection in the law of supply.
Law of Supply
It is obvious that that there is the straight dependence between the prise of good and the amount of good on the market. Rising of prise is stimulating the producer to rise the amount of good on the market. This interrelation between the prise and the amount of production is called the law of supply. The interest of producer in increasing the amount of produced good can be easily can be explained the singe number of good is leading to definite amount of income from selling of this good.
The supply in big quantity is caused by next factors: change in prise for resources which are includes in production of good, change in technologies which causes the ri...
