We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Free market in the economical world and business - Assignment Example

Comments (0) Cite this document
Summary
Question 1: Preamble Define Free Market A free market is a market economy whose control lies with the supply and demand of goods and services, with no government control. A free market is the ideal market economy in which buyers and sellers transact freely based on mutual agreement on the prices of goods and services without the intervention of the government through subsidy, taxes, or regulations…
Download full paperFile format: .doc, available for editing
Polish This Essay97.4% of users find it useful
Free market in the economical world and business
Read TextPreview

Extract of sample
"Free market in the economical world and business"

Download file to see previous pages Explain how the system works to allocate resources The allocation of resources depends on supply and demand of those resources in a free market economy. The buyers and sellers, or their agents undertake all the exchanges and transaction voluntarily (Friedman, 2003: 36). Both the seller and the buyer accept the transaction because both expect to gain from it. Consequently, the two may repeat the exchange conditions the next time (or refuse to transact) if their expectation was met (or disregarded) in their past transactions. Ultimately, the reason for engaging in the transaction is that both the parties expect to benefit from the exchange. This is the main reason that distinguishes the free market from the free trade of the mercantilist period, expounded by French essay-writer Montaigne. According to Montaigne, the mercantilists held that in any trade transaction, there must be a loser and a winner: the loser is the “exploited party” while the winner is the “exploiter”. The mercantilists’ belief is invalid because the eagerness and even willingness of both the sellers and the buyers mean that they expect to benefit. Translating the trade of free market in modern game-theory jargon, transactions are a win-win exchange. They result to a positive sum rather than the conventional “negative sum” or “zero sums” game. Two factors determine the availability and allocation of resources in a free market: the value of the resources according to each participant, and the bargaining skills of the participants. How the buyers value the resources comparative to the other resources they could buy largely determine the distribution and allocation of these resources in the market (Friedman, 2003: 82). The exchange terms, or prices, depend on the quantity (measure) of the particular resource in the given market set up. Ultimately, the allocation of the resources depends on their availability measure in the market in relation to the evaluation of the buyers. In summary, resource allocation relies on their demand and supply. In the supply of a resource, an increase in its price reflects an increase in demand on the mind of the buyers resulting to more money bidding for it, thus the price of the resource shoots up. The reverse will occur if the price, and thus the demand, for the resource decrease. In contrast, the buyer’s evaluation is that the increase in supply of a resource brings the value of the resource down. The reverse occurs when the supply of the resource decreases. From the demand and supply effects on the allocation of resources, the free market incorporates a highly interactive and complex pattern of transactions. Arguments in favor of this system The manner in which the free market works to allocate resources has come under debate and criticisms by economists. Nevertheless, the free market has four distinct arguments that enforces it existence, and which are discussed accordingly. The first argument is the efficiency of allocating scarce resources in the economy. This argument relates to the neoclassical economic tradition of benefits for all the participants in the transaction. In a completely free market, supply of goods and services matches their demand. The participants maximizes their benefit in the exchanges, everybody is a ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Free market in the economical world and business Assignment”, n.d.)
Retrieved from https://studentshare.org/business/1393156-economics-for-busiess-and-management
(Free Market in the Economical World and Business Assignment)
https://studentshare.org/business/1393156-economics-for-busiess-and-management.
“Free Market in the Economical World and Business Assignment”, n.d. https://studentshare.org/business/1393156-economics-for-busiess-and-management.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Free Market System and Arguments in its Favour
This assessment will also include market failure and the steps United Kingdom government has taken to avoid market failure. Free Market System and Arguments in its Favour Free market system of resource allocation is based on the principles of supply and demand (Gregory & Stuart, 2003).
12 Pages(3000 words)Assignment
Positive and Negative Impacts on International Business
These extensions used to arise from the movements of ideas, things and people. The term globalization cannot be defined in terms of integration or internationalization. Globalization depicts the interaction across several cultures of different macro-social forces (Dasgupta, 2004, p.214).
20 Pages(5000 words)Assignment
Business Proposal for a new international SME
India, as an emerging economy is increasingly attracting investor throughout the world to her shores. The service sector in India, which is one of most attractive sectors in India in terms of FDI inflows, provides immense opportunity for Practicus. The business proposal has looked and analyzed the various aspects in relation to doing business in India such as economic, political, legal, trade and cultural aspects.
12 Pages(3000 words)Assignment
FREE-MARKET APPROACH AND REGULATORY APPROACH TO STANDARD SETTING IN ACCOUNTING
The provided an assessment standard setting approaches used in accounting including the free market approach, regulator; thereby, illustrated the applications for such approaches. The study employed literature materials to present systematic and clear understandings of accounting standard setting in relation to financial accounting standards.
8 Pages(2000 words)Assignment
Business Plan for Budget Hotel Sri Lanka
To be specific, it has become the fourth largest source of foreign exchange earner with US $384.4 million revenue in 2007(Appendix 2). At this juncture, setting up a budget hotel to suit the needs of middle class and lower class travelers is found to be viable and prosperous in future.
10 Pages(2500 words)Assignment
Economical Concepts
Macroeconomics conversely is the subject of economics that examines the performance of the financial system as a complete and not only on precise organizations but also to the whole industries and financial systems. Therefore, it examines wide range of economical prodigy like Gross National Product (GDP) and how modifications distressed it in national income, unemployment, growth rate, and cost levels.
2 Pages(500 words)Assignment
Real world business issues
Organizational performance becomes the key motivating factor that is significantly driven by internal and external issues. Indeed, while internal factors and issues are intrinsically linked to
8 Pages(2000 words)Assignment
International Environment & Business and Europe
The deepest manifestation of economic integration, an economic union adds to a typical market the need to fit various key policy ranges. Most outstandingly, economic unions oblige formally composed financial and monetary policies and work market, territorial improvement, transportation and modern policies.
5 Pages(1250 words)Assignment
Business and Society
The innovation, expansion and marketing activities of the companies were strictly scrutinized by the government authorities. However, the market power of the companies started to increase with popularization of privatization
4 Pages(1000 words)Assignment
Business Strategy
Apart from Teochew and Cantonese, Crystal Jade Restaurants also offers style cafes and continental boutique services. The good and quality service offered by this company
8 Pages(2000 words)Assignment
Let us find you another Assignment on topic Free market in the economical world and business for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us