Because if a business is profitable, competitors will spring up, thus clustering prices towards the equilibrium. Conversely, if it is not profitable, then prices will move toward the point at which it is, or the business will exit the market.
Generally speaking, a company in a free market economy must set prices for its products that are "competitive" with other companies in the same line of business. If a company is inefficient in its operations, it won't be able to remain in the market of its competitors and may go bankrupt.
Binding Versus Non-Binding price ceilingsA price ceiling can be set above or below the free-market equilibrium price. For a price ceiling to be effective, it must differ from the free market price. In the graph at right, the supply and demand curves intersect to determine the free-market quantity and price. The dashed line represents a price ceiling set above the free-market price, called a non-binding price ceiling. In this case, the ceiling has no practical effect. The government has mandated a maximum price, but the market price is established well below that.In contrast, the solid green line is a price ceiling set below the free market price, called a binding price ceiling. In this case, the price ceiling has a measurable impact on the market.
As of July 2014, the market cap for FreeSeas Inc. (FREE) is $12,837,522.00.
You an look it up on Wikipedia and through Google on how the market works. Yes, you can learn about stock market basics online for free. www.daytrading.about.com and moneycentral.msn.com are two informative websites for learning more about the stock market.
yes it is
No The market is not free
A free market economy is a market based one. The prices of goods and services are determined independently in a free market.
Supply relative to demand is primarily responsible for setting prices in a free market system.
Equilibrium price: demand formula = supply formula So in a free market most entrepreneurs decide to set the price in such a way that supply is not higher than demand and vice versa.
"Supply is relative to demand" explains the factors responsible for setting prices in a free market system.
"Supply is relative to demand" explains the factors responsible for setting prices in a free market system.
prices
Through prices
A free market is a market where prices are determined by supply and demand. Free markets contrast with controlled markets in which prices, supply or demand id directly controlled.
A free market is a market where prices are determined by supply and demand. Free markets contrast with controlled markets in which prices, supply or demand id directly controlled.
The equilibrium price refers to the price point at which supply and demand are equal. This price can be found by applying the three basic properties of equilibrium.
A free market is an economic system where the government is not involved and prices are set by private business owners. The main implication is the fact that consumers are not protected and are therefore abused through exorbitant prices.