The mechanism of market functioning is a serious system that deserves special attention. Indeed, it is thanks to the market that economic entities interact and the movement of capital is organized not only within one country, but also abroad. The market allows you to solve the main issue that any enterprise faces: how and to whom to sell the products.
The mechanism of market functioning is based on established norms and rules of behavior. Any transaction carried out on it must be subject to the current legislation of the state, but at the same time it must satisfy the needs of both parties. The main element of each market is the supply and demand for a product or service, as well as the price level for them. Under the price it is accepted to understand such an amount of money that must be paid for the proposed product. The level of demand shows the degree of interest of the consumer group in a particular product and the ability to purchase it. A proposal means the volume of goods that manufacturers can offer, based on the situation on the market and the capabilities of the economic entity itself.
Thus, the mechanism of market functioning regulates these elements and brings them into equilibrium. The level of supply and demand should be in balance, as the disharmony of these indicators can lead to serious economic downturns. For example, if enterprises produce more finished products than a consumer can for some reason buy, then there is a problem of a lack of funds to start the next production cycle, in addition, actual profit is significantly reduced compared to the planned one. The entrepreneur has to expand the cost of renting warehouse space, because you need to store unsold goods somewhere. And if the needs of customers exceed the capabilities of enterprises for the manufacture of products, then prices in the market will increase, which may lead to an increase in the cost of other goods and services.
Another important element, which includes the mechanism of market functioning, is the competition for the consumer group between manufacturers of similar products. Moderate competition has a positive effect on the quality of goods and services, and is also a tool that restrains unlimited price increases.
For the population, one of the most important types of market is the one on which the assessment of supply and demand of labor resources in the country takes place. The mechanism of the functioning of the labor market is slightly different from all the others. This is due to the fact that it carries out the assessment and management of living people, and not material wealth . That is why specialists have to consider the psychological, social, religious and many other aspects.
The labor market is designed to connect employers and labor, that is, it is a tool to meet the needs of entrepreneurs in additional labor resources and helps professionals find jobs in accordance with their qualifications and experience. Such a market is the labor exchange, as well as agencies that carry out transactions for the search and hiring of employees. In this case, the consumer is an economic entity, which creates demand.
Features of the functioning of the labor market determine the relations that are forming on it. Since goods, in fact, are human capabilities and skills, it is necessary to competently develop motivation and ways to increase labor activity. In this huge helper is considered such an element of the market as competition. The rivalry between specialists of the same level for the right to win a specific position contributes to the personal growth of market participants, the acquisition of additional knowledge in a certain field, and the improvement of qualifications.