Economics

Paper Summary:

This paper discusses the concept of free market economies. The paper contends that most economists argue that free market economies are superior to controlled economies because free markets are more efficient; they encourage individual responsibility for decisions. The profit motive provides the strongest incentive to individuals, and firms to allocate resources for their most productive use and to produce goods and services that the public wants, using the most efficient means of production. The paper explains that controlled economies, contrastingly, suffer from inefficiency as centralized decisions about production and prices create artificial distortions in the economy, and the lack of profit motive creates lethargy.

From the Paper:

"A "free market economy" is one in which most businesses are privately owned and where individual producers and consumers determine the kinds of goods and services produced as well as the prices of such products through a voluntary exchange of goods and services. Competition is a key factor in market economies as it keeps the prices of products in check, forces the competitors to enhance the efficiency of their production process, and drives the inefficient producers out of the market. Another important feature of a free market economy is that income is distributed largely through the operation of markets."

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