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What are the advantages of free market economy?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 aliya bhat asked over 2 years ago

Hi, Explain about the advantages of free market economy?

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8 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Surbhi answered about 2 years ago

Advantages of a free-market economy: - In the absense of externalities, the allocation of goods in the economy tends to be more efficient (meaning that starting on how goods are split in a free-market economy, one cannot improve the situation of everyone, without at least hurting someone in the economy)

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Surbhi answered about 2 years ago

Advantages: 1) Prices are based on what target population can afford. 2) Motivation to discover products that improve or save lives; the person who discovers something can achieve fame and fortune vs a government limiting what can be researched and who gets the credit. 3) Freedom to buy or reject products 4) Demand for a product creates more jobs (production, management, bookkeeping, etc.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered over 2 years ago

Competition between firms should lead to firms wanting to produce as efficiently as possible because they want prices to be as low as possible so that consumers will want to buy from them; this drive towards efficiency should mean that resources are not wasted. Goods, which are being demanded by consumers i.e. consumer wants will be produced, and those that are not in demand will be dropped.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

Competition in the marketplace provides the best possible product to the customer at the best price. When a new product is invented, it usually starts out at a high price, once it is in the market for a period of time, and other companies begin to copy it, the price goes down as new, similar products emerge. In a competitive market, the poor versions of the product or the overpriced will be pushed out of the market because consumers will reject them.

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Open uri20170510 32134 1c996lj?1494421732 Anil answered over 2 years ago

Businesses need a free market so there are no restrictions on the profits they can make. The idea behind a free market is that prices will regulate themselves. Supply and demand will reach the point of equilibrium where the most money will be made. However, what is best for the company is not necessarily what is best for the people. A free market puts the needs of companies above the needs of consumers. A free market economy is driven by individual innovation and the notion that hard work and ingenuity will be rewarded by success. All businesses exist to make a profit. Therefore, in the free market system, a successful business makes a consistent profit in a field of competitors. The concept of competition is an important component of a free market system. Competition in the marketplace provides the best possible product to the customer at the best price. When a new product is invented, it usually starts out at a high price, once it is in the market for a period of time, and other companies begin to copy it, the price goes down as new, similar products emerge. In a competitive market, the poor versions of the product or the overpriced will be pushed out of the market because consumers will reject them. The free market system determines the winners and losers in each industry based on the demands of the customer, whether industrial, business customers, or consumers, people who buy for personal use. In a free market system, the entrepreneur takes a great risk to launch a business, putting up capital, with the hope that the product or service will succeed. If the risk is considered a disadvantage, when the business succeeds, the profit and control of the businesses future is determined by the owner, not the government.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered over 2 years ago

First, it allows for individuals to innovate. Individuals have the freedom to create new ideas, new products, and new services to sell for profit. They are not required to only produce what the government tells them to produce. Due to this freedom, competition is created, forcing companies to create new products and features. A clear example of this is the cell phone market. New phones come out each year, as individuals create new ideas and new features for their consumers.

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Picsjoin 2017224123730582 Archana answered over 2 years ago

Hie Adhya, **Advantages of a free market economy** - Competition between firms should lead to firms wanting to produce as efficiently as possible because they want prices to be as low as possible so that consumers will want to buy from them; this drive towards efficiency should mean that resources are not wasted. - Goods, which are being demanded by consumers i.e. consumer wants will be produced, and those that are not in demand will be dropped. - More choice for the consumer in terms of what they buy. - Profit rewards those who are successful for the risks that they take; they can then reinvest profit to make more!

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered over 2 years ago

A free market economy has two key advantages. --------------------------------------------- First, it allows for individuals to innovate. Individuals have the freedom to create new ideas, new products, and new services to sell for profit. They are not required to only produce what the government tells them to produce. Due to this freedom, competition is created, forcing companies to create new products and features. A clear example of this is the cell phone market. New phones come out each year, as individuals create new ideas and new features for their consumers. The second major advantage is that customers drive decisions. If a customers wants a certain product or feature, the producer must meet their needs in order to survive. This ultimately drives the price, as customers determine the price of products.

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