Market Economy

A market economic system is the one that we

know as capitalism,where goods and services
are freely exchanged on an open market. The
value of the outputs is determined solely by
market interaction.
Market economy is an self organize based on
fundamental economic forces such as supply
,demand and competition
An economic system in which production and
prices are determined by unrestricted
competition between privately owned
businesses. "the process of transition to a
market economy led to major changes"
 Price can be an instrument for the allocation of
resources through the mechanism of the market
system
Keypoint Characteristics of a Market
Economy
•Private Property
•Freedom to choose
•Motive of self-interest
•Competition
•Limited management of the government
Significance of the Market
Structure
• The type of market structure in which the
business operates will determine the amount
of market power or control the business
owner will enjoy.
• Greater market power means a greater ability
to control prices, differentiate the products
one offers for sale thus, leading to
opportunities for more profits.
Advantages of a Market
Economy
 • Consumer satisfaction is high.

• There is a lot of individual freedom for

consumers and firms.
• Can easily react to small day to day changes.

• People can react to the market right away,and

do not need to wait for the government to
decide what to do. Innovation and creativity
thrive.
• Innovation is encouraged because it provides
a competitive edge and increases the chance
for wealth.
Disadvantages of a Market
Economy
•Does not provide basic needs for all citizens.

•Lots of risk and uncertainty.

 •Struggles to provide services that are not
profitable.

•Can easily fail if certain conditions are not met.

Reasons why Philippines is not a
Market Economy
 1. Punishing Tax Rates
The problem with not updating the tax system is
this phenomenon called “bracket creep,” a
movement into higher and higher tax brackets
because of inflation. Due to inflation, the
purchasing power of the Philippine peso
weakens over time. Meaning to say, 1 peso in
1997 is “not equal” to 1 peso now in 2017.
 2. Anti-Competitive Market
Conditions
In a free market system, not only are the
consumers free to abstain from business X to
buy from business Y, but laborers eventually end
up being free as well. Free, in a sense, that if a
person is not happy with his or her employer, he
or she can always quit and go to another
employer willing to take him or her in.
 3. Weak Private Property Rights
A market economy is an economic system in
which economic decisions and the pricing of
goods and services are guided solely by the
aggregate interactions of a country's individual
citizens and businesses. There is little
government intervention or central planning.