What are the disadvantages of a free market economy?
- No provision of merit goods like education, health, housing... so the poor will be deprived of the merit goods. In this way the rich becomes richer and the poor becomes poorer.
- No provision of public goods (bus stop, garden, street lighting, army, police, fire services) important requirements for public goods not provided since it is not profitable to produce as consumers are not directly willing to pay for them.
- Over consumption of demerit goods (drugs, cigarettes, alcohol) if consumers have a preference for these goods, then they will be provided given that they are profitable to produce.
- Social cost ignored e.g. private firms ignore negative external factors (air, water and noise pollution, road conditions etc;)
- Wastage of resources
- Social injustice
- Economic instability
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an economy that operates by voluntary exchange in a free market and is not planned or controlled by a central authority.
There are many advantages to a free market economy. They range from the moral issues to the practical issues. We will deal mainly with the practical ones. -Unprecedented inno…vation. Free markets are wrought with inventions and the capital to research them. Countries classified as having a free market have been responsible for the vast majority of inventions since the 19th century. -Very high income mobility. This means that under a free market system it is easier to move around income brackets. This is not to say it is easy, it is just easier to become rich or poor when you're left to your own devices as opposed to a controlled economy where resources are allocated by the government. -Massive increases in efficiency and productivity. This happens from the survival of the fittest aspect of free markets. Firms that have higher costs than others (by producing inefficiently) will go out of business as those that are more efficient prosper. Thus, firms are always looking for cheaper ways to do things (this drives costs and prices down, etc etc) -A much higher GDP. Free market-leaning countries have higher GDPs than command market-leaning economies. This is because they produce more. -Very productive tax system. Due to the huge wealth level, it is easy to collect taxes. For example, it is easier to get taxes from a very rich person than from a person who barely has enough money to eat. This large amount of tax revenue results in: -More money spent on social programs. Free market nations generally spend more or have more efficient social programs. For example, the police and firefighting technologies in America and Europe far surpass those of China or many Arab states. Answer: 1 unprovision of merit goods like education,health,housing... so the poor will be deprived of the merit goods. In this way the rich becomes richer and the poor becomes poorer. 2 Non provision of public goods(bus stop,garden,street lighting,army,police,fire services) important requirements for public goods not provided since it is not profitable to produce as consumers are not directly willing to pay for them. 3 over consumption of demerit goods(drugs,cigarettes,alcohol) if consumers have a preference for these goods, then they will be provided given that they are profitable to produce. 4 social cost ignored private firm ignore negative externalities(air,water and noise pollution,road conditions.) 5wastage of resources 6social injustice 7 economic instability -- In every category 1-7 above, countries which are furthest from a free market economy perform worse in those categories than those closer to free markets. A stark and apt comparison is North and South Korea which up until the 1950s had the exact same history, yet now are completely divergent where the South Koreans excel in every one of the above 7 categories compared to the North. It's very clear now empirically that individuals that live in countries that reject the free market are much worse off in every respect than those who live in freer societies with stronger capital markets.
One disadvantage of a free market economy is that the wealth isnÃtdistributed through all groups. Another disadvantage is thatprofits are not guaranteed.
The market economy has many advantages, but it also has its shareof disadvantages. Two of the main disadvantages are that this typeof economy can be very unstable and it tends… to cause a large gapin the distribution of income.
Individuals in the mixed economy(laissez-faire economy) are free because they are free to choose what they want to do.
what is the role ofgovernment in the market economy
No. it should be under mixed market economy
Advantages: Competition > profit > innovation. Disadvantages: higher costs for consumers there are losers risk for an entrepreneur
Explain the disadvantages of a Free market economy
i have no idea!!! im in gade 8 at wghs and i need this for an assignment!!!!! helllp someone please answer this question!!!!!!!!
Advantages: competition sells products at the lowest price and the best qaulity good Disadvantages: No government involved means some products could be harmful to people
One of the key disadvantages of a market economy is that it isunpredictable. Many events can cause shocks in a market economy.For instance, a natural disaster or war can cause… volatility in themarket. A lack of stability is the key feature of the marketeconomy.
Some arguments for disadvantages of the free-market economy: 1) Difficulty in over-coming underutilisation of inputs (this means it is difficult in a free-market to coordinat…e under-used resources). 2) Problems in regulation of safety (free-market firms can cheat and create harmful goods to make more profit). 3) Distribution of income is uneven (many believe the free-market rewards the rich and punishes the poor). 4) The free-market has fluctuations and is considered unstable (the free-market has a sort of business-cycle associated with it). 5) The free-market allows things like unemployment to occur (many people consider unemployment bad and preventable). 6) The free-market puts profit over humanity (some critics believe that the profit motive is more important than human well-being in the free-market). 7) Inability to produce and distribute public goods (i.e.) military protection, courts, etc.).
A Market economy is reffered to as an economy in which the consumers decide what to produce, How to produce and For whom to produce. There are several disadvantages of a marke…t economy. The main one being an inefficient allocation of resources refered to as market failure. Firstly, some good and services would be under provided such as defence and education.
In Politics and Government
yes!! . Not really. A "free market" is generally a micro -economic term, and describes the conditions where consumers and suppliers form an economic exchange generally fre…e of outside price controls. A "market economy" is a macro -economic term, and describes one of many different large-scale economic forms which use a free market micro-economy as its basis, but have a varying degree of regulation layered on top.
yes..india is a free market economy
In Business & Finance
really don't understand