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ABSOLUTE ADVANTAGE: The general ability to produced more goods using fewer resources. This idea of absolute advantage is important for trading that occurs between both people and nations. A nation can get an absolute advantage from an advanced level of technology or higher quality resources. For a person, an absolute advantage can result from natural abilities or the acquisition of human capital (education, training, or experience).
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                           MARKET-ORIENTED ECONOMY: A mixed economy that relies heavily on markets to answer the three questions of allocation, but with a modest amount of government involvement. While it is commonly termed capitalism, the term market-oriented economy is much more descriptive of the structure of the economy. The United States is the primary example of a market-oriented economy. A market-oriented economy takes to heart the fifth rule of imperfection. Such an economy relies predominately on the efficiency of competitive markets to allocate resources, but governments enter the fray with economic policies to address market failures, business cycles, and other problems that might arise. The United States, for example, answers about two-thirds to three-fourths of the economy's resource allocation questions with markets. The remaining one-fourth to one-third are answered by governments.The key institutions that form the foundation of a market-oriented economy are: - Private Property: Private individuals, rather than governments, are the primary owners of resources, goods, and other assets.
- Individual Freedom: Those who own resources, goods, and other assets have the freedom to use their property as they see fit.
- Competitive Markets: Market are used to exchange privately owned commodities and to answer the three questions of allocation.
These three institutions create an economic environment that provides the incentives to achieve efficiency. In a market-oriented economy, buyers and sellers have the freedom to direct their resources through competitive markets to the highest valued uses. A market-oriented economy, however, is definitely a mixed economy. While most allocation decisions are made voluntarily through market exchanges, governments also impose choices on the economy through regulations, taxes, and spending. Two key functions that governments provide in a market-oriented economy are: - Legal System: Governments operate the legal system to establish the "rules of the game" and maintain order throughout society. Without such order individuals are discouraged from undertaking voluntary market exchanges.
- Public Goods: Governments provide public goods, like national defense and education, that cannot be efficiently provided through voluntary market exchanges. These goods are provided directly through taxes and spending or indirectly through regulatory oversight.
Recommended Citation:MARKET-ORIENTED ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: December 1, 2023].
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Today, you are likely to spend a great deal of time at an auction trying to buy either a solid oak entertainment center or a remote controlled ceiling fan. Be on the lookout for letters from the Internal Revenue Service.
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Rosemary, long associated with remembrance, was worn as wreaths by students in ancient Greece during exams.
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"Sometimes our light goes out, but is blown into flame by another human being. Each of us owes deepest thanks to those who have rekindled this light. " -- Albert Schweitzer, missionary physician
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