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Effectiveness of the Free Market Economies over Mixed Economies - Essay Example

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This essay specifies the advantages, that the free market economy has over the mixed economy. It is argued in the essay, that this type of economy is the most efficient one, compared with others. Free market leads to optimal allocation of resources…
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Effectiveness of the Free Market Economies over Mixed Economies
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Download file to see previous pages Competition is one of the simple reasons why there are generally so many diverse varieties of goods for consumers to choose from. On the production side of the market, firms making goods which are more popular with consumers can sell them at competitive prices and earn profits. But producers who make uninvited products, or operate unproductively and pay too much to create their products, will suffer losses, eventually, they must either learn to create and compete efficiently making produces customers need at competitive rates, or they will verve out of business. Another effectiveness of free market economies is that companies can fine-tune easily to changes i.e. they don’t have to follow the government procedures when they want to change the kind of products to produce. This is better as opposed as opposed to mixed economies where unsuccessful regulations may paralyze production processes. This can lead to shifting of economic balance. In a mixed economy, the government also decides on the amount of tax to be levied on products which lead to people grumpy about high taxes and their reluctance to pay. The main advantage is that a free market economy enjoys the determination of prices by forces of demand and supply without monopolistic or oligopolistic influences. The role of the state is very limited in determining what goes on in a free market as opposed to mixed market which is controlled by both government and private enterprises. Government regulation stimulates inefficiency. Free market leads to optimal allocation of resources in a country. This would only happen in a state of equilibrium or where the demand and supply are equal and there is a unique price for every commodity in question. In a practical world however...
This essay offers a comprehensive theoretical analysis of the free market economy, as a type of the economic system. The free market example is The United States Of America. Economics system is the resolving system for the basic economics problem. There are three types of the economics system; planned economy, mixed economy and free market.
Businesses and consumers select the products they will produce or buy in free market economy. In other words, the producers decide on the kind of goods to produce, how they are to be produced and what price to charge on the final goods produced and even what to pay their employees. The choices are made by persons themselves and not the government.
Free market economies offer numerous advantages. One of the main advantages is competition Competition helps keep prices lower because several companies will be competing for customers. Lower prices are an effective way of attracting and retaining customers.
Another effectiveness of free market economies is that companies can fine-tune easily to changes i.e. they don’t have to follow the government procedures when they want to change the kind of products to produce. This is better as opposed as opposed to mixed economies where unsuccessful regulations may paralyze production processes.
In a free market economy innovation is compensated Producers who are innovative will come up with more efficient methods of production. Innovation of new products will see the needs of consumers in better ways that existing goods and services.
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