Question

"Discuss whether free market is necessarily efficient. Give some examples to illustrate the
limitations of government interventions in restoring the market efficiency. Some economists advocate market-based solutions, discuss its merits over command-and-control policies."
Please give 3~4 practical examples with your own word and apply micro-economic theories and concepts to these examples.

Answer 1

At present, a world without borders is being imagined, that is, globalization.Due to globalization, the economy of the world is connected to each other, due to which one country got ease in the market of another Free trade agreements are being done by various countries to ensure access to the market of different countries and to make the market more prosperous and less complex. Such as NAFTA, Europian union etc.

The free market policy increases competition in the market, thereby improving the quality of goods and service at a much faster pace, which is an important advantage of free trade. Apart from this, availability of resources also increases easily due to this.

But the government also has an important role in governing the policy of free trade. It adopts the policy of free trade i.e. market free market according to the market of her country. This is the reason why the free trade agreement is not so easy between different countries.  As such, RCEP has not been subscribed by India until recently, which leads to the conclusion that the government would have had a major role in implementing the Free Trade Agreement.