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Free market economics overview
Free market economy
Def: An economy where all economic decisions are taken by individual households and firms and with no government intervention. E.g.: USA, Hong Kong, UK.
A free market economy functions on the assumptions that firms seek greater profits, workers seek greater wages, and consumers seek best value for money. There are minimal government restrictions and intervention, as the economy regulates itself by the laws of supply and demand.
* Price mechanism (def: the system in a market economy whereby changes in price in response to changes in demand and supply have the effect of making demand = supply)
Shortage: If demand increases or supply decreases, d > s. Producers will raise their prices, and supply more. Because of the higher prices, some consumers will be di...
Free market economy
Def: An economy where all economic decisions are taken by individual households and firms and with no government intervention. E.g.: USA, Hong Kong, UK.
A free market economy functions on the assumptions that firms seek greater profits, workers seek greater wages, and consumers seek best value for money. There are minimal government restrictions and intervention, as the economy regulates itself by the laws of supply and demand.
* Price mechanism (def: the system in a market economy whereby changes in price in response to changes in demand and supply have the effect of making demand = supply)
Shortage: If demand increases or supply decreases, d > s. Producers will raise their prices, and supply more. Because of the higher prices, some consumers will be di...
Posted by: Ryan Wilkins
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