In a "Market Economy System", the main Economic issues submitted to "Individu Mechanism" and Companies make decisions about Production and Consumption. Price system, market system, the system gains and losses, as well as incentives and rewards perinsip, is key to answer the what, how, and for whom goods and services are distributed.
What commodity issues and how much should be produced, delivered to the market. The Company always produces a variety of products needed by society and profitable as possible for the company. For example, people need warm clothing and wet season, the company will produce it. How many sweaters to be in production and how the quality depends on the ability of the public or consumer purchasing power. Problem will be solved through Market Mechanisms.
The issue of how to produce, the company will choose the most efficient ways of production and efficient. The most efficient way of production or efficient production methods that are low cost. For example, 1,000 pieces of warm clothing in a week can be generated by two ways. The first way, using the 10 workers and 5 sewing machines. The second way, with labor 7 and 7 sewing machine. If the first way is more expensive, companies need to select it as the most efficient way of production. However, the system of capitalism or the market as a pure system no longer exists.
In the Capitalist Economic System or Government Market has three main functions, namely:
- Governments Increase Efficiency by creating competition and externalities such as pollution control and provide public goods.
- Pemetinyah Promote Justice by using taxes and programs to redistribute income pengeluaranya to special groups.
- Government assist the Development of Macro-Economic Stability and Growth, reduce unemployment, and inflation by encouraging economic growth through physical and monetary policy.
