Market

A market is a medium of commodity exchange. Depending on their territorial boundaries and size, markets are referred to as local, national (internal or home), and world (external or foreign) markets. The market is the predominant and determining link between commodity producers, based on the social division of labor.

Under simple capitalist commodity production, the market is the vehicle for the spontaneous adaptation of the structure of commodity production to the volume and structure of social needs. In the market the social character of the expenditure of labor by individual commodity producers is recognized, and the socially necessary production conditions that determine the magnitude of the cost of goods and their market value are revealed and established. The basic elements of the market mechanism are price, supply, and demand.

The magnitude of demand, which reflects the level of social needs, is limited by the buyers’ incomes, that is, by the purchasing power of the population. Supply characterizes the dynamics of social production and represents the totality of commodities received for final sale in the market (market resources). The relationship between supply and demand directly influences the formation of a definite price level. The movement of prices in the market ultimately reflects changes in labor productivity and the volume and proportions of social production, as well as the dynamics of monetary incomes.