Free Market Economy Essay Example | Topics and Well Written Essays - 2000 words

Free Market Economy - Essay ExampleThe restrictions include both the ownership and exchange of commodities. In this type of economy, the price of each detail or service is agreed upon with the mutual consent of sellers and buyers. The seller is free to offer how much he wants to sell his products or services. Likewise, the buyer is free to sport for the purchase price he wants or needs to buy the product or service he or she craves for. The free market economy is akin(predicate) to laissez fair economy where the economic condition in the real world is mostly confining government intervention in economic matters as a regulating against force and fraud among market participants. Therefore, with the countrys government force limited to a defensive role, government does not ignite the spark in the marketplace. The government, in this scenario has the economic role to levy taxes in order to finance the smooth flow of the free market economy. In the extremely free market economy, its ad vocates strongly denounce the governments tax intervention.On the other hand, the opposite to free market economy is a controlled market. In this type of economy, supply and price are primp by a government. ... the free market economy is that the traders and buyers themselves must not force for defraud the other party thereby making the other mortal unhappy. In short, all trading done are morally voluntary on all parties. Supply And Demand Theory display panel 1. Demand Curve1The above table shows that, if the buyer is made to choose, if the purchase price (P1) above was lowered (P2), the demand for the products increases from the original quantity (Q1) to the higher quantity (Q2). This is taken from the St. Charles County Community College Econ 100-80 go off Economics class. Table 2. Supply CurveSupply Curve2 above shows that if the supplier is made to choose, the supplier can increase the quantity he sells when the prices of his goods and services increases. Table 3. Equilib rium Price.Table 3 above based on Deardorffs Glossary of International Economics3 , states that the equilibrium price is the price where the demand coil and the supply curve intersect or meet. This equilibrium price is designated by the letter E. This is the price that makes both the seller and the buyer happy.2. Explain the possible reasons for state intervention in the working of free markets and decribe the manner in which such intervention could take place. (30 marks)In reality though, there is really no completely free market economy. We exhaust to admit that all governments do interfere with the generally free market to some degree. There will always be government intervention in the form of price controls, taxes and restrictions that prevent new or unwanted competitors from entering the states free market. In supply-side economics, free market is a technical term that is use to pinpoint to a political or ideological viewpoint on policy which is may