Trade Offs Case

However, when the equilibrium price is beyond the expectation of a fair market value, for reasons of political or social concerns governments will intervene in the market and establish limits on such things as wages, apartment rents, electricity, or agricultural commodities. Government uses price ceilings and price floors to keep prices below or above market equilibrium. (Stone, 2012, page 68)

thinking at the margin: deciding whether to do or use one additional unit of some resource.

The current issues that have been created by the market have trapped our political system in a never-ending cycle that has no solution but remains salient. There is constant argument as to the right way to handle the market, the appropriate regulatory measures, and what steps should be taken to protect those that fail to be competitive in the market. As the ideological spectrum splits on the issue and refuses to come to a meaningful compromise, it gets trapped in the policy cycle and in turn traps the cycle. Other issues fail to be handled as officials drag the market into every issue area and forum as a tool to direct and control the discussion. Charles Lindblom sees this as an issue that any society that allows the market to control

The free marketplace represents a superlative model of capitalism, since it denotes the most proficient and profitable way of production. In a free market, economic actors are capable of conducting business devoid of political interferences, such as the burden of a minimum wage, or trade in tariffs. Without these limits, economic actors are abridged to a state of clean competition, driving costs downstairs and resulting in senior quality and lower price products.

Trade can make everyone better off – this is how people interact; by trading with others. We can buy a variety of food and services at a lower price.

As Milton Friedman once said, “Freedom is a rare and delicate plant. Our minds tell us and history confirms that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power and political hands, it is also a threat to freedom.” Friedman’s “Capitalism and Freedom” takes us into the mind of an economic genius and shows us his beliefs in a free market and the threat it presents to a dictatorship. Friedman, clearly a supporter of the free market, gives examples to show how a free market can aid a society in striving for success, becoming more dominant, and becoming more powerful. Though, at times he does show how a free market has disadvantages and he makes us aware as to how it can aid people in gaining individualism, knowledge, and overall improving a society. A free market is one that the price of a good or service is determined by supply and demand, in theory, rather than by government regulation. Milton’s thoughts and theory is that through a robust free market with political freedom, economic freedom will follow. Showing how economic freedom is a crucial toward the success of political freedom, Friedman’s theory of a free market and the Do Nothing Principle are major themes throughout his book.

However, I don’t agree with the fact that the government place rules on a merchant product. In the article, Zwolinski brought up the point on what is a “reasonable” price, and how does that vary. The government can use the word “reasonable” to their own benefit. Zwolinski also share that price gouging is very unfair on businesses. Price gouging can perhaps cause a business to not make a large profit. However, is a large profit for a business more reasonable than someone losing their life due to price gouging? Does a large profit for a business account for how many store owners can take advantage of many in low income minimum wage workers and

Government plays a crucial role in the market economy by ensuring the laws and regulation are abide by, and control the production of the private sectors, although, over the years its efforts in controlling such economies are minimal and insignificant. Market forces of demand and supply play a major role in setting trends that such market economies follow. Economic growth, inflation, interest rates, wage rates of workers and unemployment rates are some of the fields the government takes part in controlling, to boost the Gross National Product (GNP) of the state.

However, what many fail to realize is that some form of government regulation within a free-market economy, such as in America, is vital to its flourishment. Personally, I am in support of a free-market economy, but to an extent. The article, Faith in an Unregulated Free Market? Don’t Fall for it, stresses the importance of the presence of moderate government regulation. Without any form of regulation, “an unregulated competitive economy will inevitably spawn an immense amount of manipulation and deception” (Shiller NYT). The example is given that it is like when grocery stores put candy bars at the checkout counter; they know whining children will often force parents to make the additional purchase, providing the store with a way to draw in additional revenue. Amazingly, checkout-line items alone can draw in up to 17% additional profit for a business. With this in mind, it is the aims of the author to make his audience aware that without any regulation, “harmless” manipulation such as this may be exacerbated to a greater level. This could result in privately owned businesses charging their customers higher prices that people will have to pay because there are no governmental laws preventing them from doing so. I too believe that some form of regulation is necessary to prevent externalities like these from occurring in a free-economy. Without rules, the people within the economy

The third principle of individual economic decision-making relates to marginal decision-making. Rational people will think at the marginal level, making small changes or tweaks in their plans to achieve the desired objective. Rational people normally have a certain system or method he/she uses to achieve their objective and they understand that sometimes small changes must be made to accomplish this.

Currently in the United States of America is a free market where the market outcomes determine the cost

Reich states that the market is dependent on “The five Building Blocks of Capitalism”: Property, Monopoly, Contract, Bankruptcy, and Enforcement. The government is in existence to control the free market and to ensure that each of these building blocks is clearly defined. They also are in charge of enforcing punishment in the situation that someone takes advantage of the market. This indicates that the problem is not

The fact that free markets are based on a contractual agreement between the buyer and seller with very little government control makes it feasible to consider it to be compatible with individual freedom. (Free Market: 2014) Classical liberals may agree with the objectives of free markets, as they emphasise the importance of individual freedom with limited control of the state. (Hagopian)The counter argument is that when the free market economy is fuelled by profit motives, it sacrifices some ethical and economic issues which can cause severe consequences. (Gerald Hanks: 2014) Modern Liberals argue that although individual freedom is important, coercion can be used as a positive outlook of bettering individuals to the best of their ability.

The government does not necessarily need to intervene how the marker goes. Therefore, the competition is a significant factor of the free marker economy.Active but limited government is another main part of the free market economy. This means that the government undertakes a significant, active role in the market, but at the same time the government’s role is ver limited because all the investments and decisions in the economy are controlled by the market than by the government. An invisible hand will control the market. Limited government is a type of government in which there is a minimum intervention in personal properties. Overall, the government tries to keep the economy in a law and let it free by limiting itself. Hence, the limited government is an essential factor of the free market economy.Last, self-interest is a significant part of the free market economy. Self-interest refers to one’s desire to buy something. The market will be generally controlled by people’s interest; the companies will compete with one another to fit the best taste. This is because the people’s interest will be the main trend in the market and it will control what should be made in the market. Consequently, the market will be self-regulated according to the theory of a free market. Therefore, the self-interest is another significant factor of the free market economy.Therefore, the competition, the

One of the trade-offs that I faced before in my life is when I had to make a decision about what I want to do after high school. If I chose to further my studies, that means I would have to give up the chance to earn money and gain working experiences. When I made up my mind to continue studying, I hesitated about which university to choose because there are too many choices. For example, if I had chosen to study at local university, I would have lost the opportunity to experience the university life in foreign country. Contrarily, if I had chosen to study abroad, there would have been a bigger financial burden for my family. I had to make the wisest decision as it affects my future.