Question

The main functions of markets include _______.

1) Building places for business transactions, such as shopping malls
2) Promoting the social interest, but not the self-interest
3) Enabling buyers and sellers to get information about each other
4) Selling goods but not factors of production

Answer 1

Markets serve multiple functions, such as facilitating transactions between buyers and sellers, conveying price information, and allowing trade in goods and factors of production.

Step-by-step explanation:

The main functions of markets include elements such as bringing sellers and buyers together for economic transactions, enabling the flow of information between the two parties, and facilitating the trade of goods as well as factors of production. Markets play a critical role in the allocation of scarce resources. This is not confined to just selling goods but extends to the entire factors market, which includes land, labor, capital, and entrepreneurs.

Additionally, markets help in finding the equilibrium price and promote specialization and both pure and imperfect competitions. They operate as an efficient mechanism for conveying information relevant to the market, particularly in relation to demand and supply. It's through this market system that prices emerge as signals that guide economic decisions and facilitate the trading process. Moreover, markets are seen as entities that align with both social interests and self-interests, promoting an efficient allocation of resources and contributing to the broader economy.