Advantages of a free market system, Managerial Economics

Advantages of a Free Market System

Incentive:  People are encouraged to work hard because opportunities exist for individuals to accumulate high levels of wealth.

Choice:      People can spend their money how they want; they can choose to set up their own firm or they can choose for whom they want to work.

Competition:  Through competition, less efficient producers are priced out of the market; more efficient producers supply their own products at lower prices for the consumers and use factors of production more efficiently.  The factors of production which are no longer needed can be used in production elsewhere.  Competition also stimulates new ideas and processes, which again leads to efficient use of resources.

A free market also responds well to changes in consumer wishes, that is, it is flexible.

Because the decision happen in response to change in the market there is no need to use additional resources to make decisions, record them and check on whether or not they are being carried out.  The size of the civil service is reduced.

Posted Date: 11/27/2012 4:30:07 AM | Location : United States







Related Discussions:- Advantages of a free market system, Assignment Help, Ask Question on Advantages of a free market system, Get Answer, Expert's Help, Advantages of a free market system Discussions

Write discussion on Advantages of a free market system
Your posts are moderated
Related Questions
Question 1: Martha National County Club is a golf club in an isolated wealthy community and accepts only females as members. There are 1,000 identical female members of the club an

Aside from the price of a product and its substitutes, another significant element of demand for a product is consumer's income. As noticed previously, relationship between demand

factors affecting demand forecasting

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2


The concept of isocost In the use of resources, firms are faced with opportunity cost.  For every addition of say capital, they must forego a unit of say labour. Expositio

Search Theory and Unemployment   You must understand the search and matching theories of unemployment in  the context of other theories of unemployment. With this objective  in

What is the theory of the firm A firm can be considered an amalgamation of people, financial and physical resources and a variety of information. Firms exist as they perform us

explain williamsons model of managerial discretion?

Q. Production Planning in demand forecast period ? Long term production planning can assist the management in organising long term finances on practical terms and conditions. S