UnitMarketsandWelfare-学生阅读.docVIP

Unit Two Markets and Welfare READING ONE The Market Forces of Demand and Supply A market is a group of buyers and sellers of a particular good or service. The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product. Sometimes markets are highly organized, while sometimes less. Price Suppose an economy runs on the lines of the purely competitive market of free enterprise，then what is produced and the prices at which the products are sold depend upon the decisions and choices made by buyers and producers．Sometimes during a good season for citrus fruits so many oranges are produced that there is a glut，and the farmers find that the low prices they receive do not cover their costs of transporting the fruit to market；sometimes the fruit-growers allow people to pick all they want，free，or avoid the fruit rotting． What and how much should be produced depend on the price mechanism which makes known to firms．The price mechanism is the process by which prices rise and fall as a result of changes in demand and supply, and thereby acts as a signal to producers to guide them on their production plans．This process is most easily seen in the way in which prices for fruit and vegetables fluctuate according to changes in supply due to seasonal climatic variations and the difficulty of storing a surplus． There were no restrictions at a11 if our economy were entirely competitive, then the market forces，or price mechanism，would operate freely. Producers would put the products to the market which consumers were willing to pay enough for it. The demand for a product and the price at which it can be sold indicate to the producer the best way to allocate resources in order to make a profit． As for the demand for a commodity, economists mean the quantity which buyers are willing to purchase at a given price over a given period of time. Demand in an economic sense only exists if the consumers have the money to buy the good