When we look at the issue of the ability of markets to funct

When we look at the issue of the ability of markets to function (hopefully well) what are some of the issues that factor into the fluctuation of markets, both on a domestic and global level? How does this affect us on a daily basis?

Solution

Following Factors cause fluctuation of markets:

a) Political factors: Whn there are changes in government policies, market fluctuates. For example, if government levies tax on a commodity, its price increases and if government gives subsidy on a comodity, its price decreases.

b) Social Factors: If some of the commodity becomes socially more acceptable and likable, its demand increases and thereby equilibrium price changes. Opposite may also happen. For example, when it was claimed that maggie contains lead, its demand was badly affected.

c) Legal Factors: If a commodity is legally banned, its demand gets badly affected. for example, government banned sale of cigrattes to persons below 18 in India, it affected sale of cigrattes to a great extent.

d) Economic factors: If our competitor incrases or decreases price, it affects market for our product because we are providing substitutes. Similarly, if price of a product which is complementary to my product gets changes, it affects demand for my product as well.

All these factors work in doemstic as well as in global economy.

It affect us on daily basis, because no consumer likes fluctuations. It may lead to inflation or recession. both affect us badly in their own ways. Stability is sought by one and all and these factors destalize stability.