Question

I would first explain to the Russian’s that the Free Market economy is based on supply and demand with little to no government control. In simple terms the free market consist of agreements made between a vendor and a seller to sell products or services without the government getting involved. In this case, the Russian’s are inquiring about the way they distribute their bread. Firstly, the natural products are produced by the owner and brought to the warehoused to be turned into their desired product which is the final finished components. The consumer and seller will come to an agreement for the price of the item based on supply and demand for the product. There is little to no interruption from the government in these cases, unless for example, the land where the product is being made is owned by the government making it a private property. The owner may agree to pay a percentage so that they may use the land to cultivate their products. However, the government or owner of the land will not have any say in the transactions or decision on prices for the products. After the vendor buys the item they will use these products to make bread. It could be a baker in this case, the baker will decide to sell his products retail stores, shops, small establishments. These outlets then make their prices based on the demand from the market. Also, they can benefit from this because if the demand is high for the product they can raise the prices, and if it is low they can lower the price still creating competition with other sellers to ensure their product is sold.
In about 150 words comment on this post.

Answer 1

Free market refers to a market which is based on supply and demand with less or no government control. Here the Russian bread companies are inquiring their business process, i.e., how they distribute bread in the market starting from manufacturing to make it available to customers. After production, the price of their product is set by the market demand and supply forces and there is absolutely no interruption of the government. Price can be increased or decreased according to the level of demand to make a handsome profit for the company. Government has no role to influence the price of the product. In this market there is low barriers to entry. Lack of barriers with little or no entry costs helps competitors flourish in a free market economy. There are competitors in bread market who are competing with each other to exist in the market. Each competitor has the liberty to set their price according to demand and supply of their product.