Question 1 (750-1000 words) Since the recent Great Recession of 2007-2009, there has been increasing disillusionment...

Question 1 (750-1000 words)
Since the recent Great Recession of 2007-2009, there has been increasing
disillusionment with the free market system. Briefly define “free market system” and
identify and describe at least three of its major concepts or attributes. Then, critically
analyze the view that the free market system is the best and only realistic alternative for
determining the allocation of resources in an economy. Provide evidence to support
your analysis.

Expert Solution

Free market system-" A free market is a system in which the prices for goods and services are all self- regulated by the open market and by consumers.

Attributes

1 private ownership of resources- free economies exist because a significant portion of resources are owned by individuals or companies in the private sector and not a central government agency.

2 thriving financial markets- Banks and brokerages exist so that they give individual and companies the means to exchange goods and services, and to provide investment services. The financial institutions then make a profit by charging interest or fees on transactions.

3 freedom to participate- another characteristic of a free market system is that anyone individual can take part in it.

The free market system ensures that the most desired goods and services are produced. This means that what to produce is determined consumers, how to produce is determined by producers. This is the best way for allocation of resources. Free market system is best for transparency.for example if there is no free market and a chocolate for 5 rupee than absolutely government is in mediator form and there is no transparency between the producer and consumer. That's why free market system is the best and only realistic alternative for determining the allocation of resources is an economy.

Rahul Sunny answered 9 months ago

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