Reply 1
Consider when a free market will lead to a Pareto efficient equilibrium (maximise social welfare). Consider when markets may be pushed into disequilibrium or when there is a completely missing market (this will probably be under the title of 'market imperfections' or 'market failure' in your textbooks). You should consider touching on the issue of the free-rider problem, imperfect information and distortionary government policy, among other issues.
You could talk about oligopolies/monopolies and why they may not lead to Pareto efficient outcomes in a free market. What could the government do to achieve higher social welfare in these cases? Which type of competition will lead to a Pareto efficient outcome?
If you touch on a few of these issues, then I'm sure that you can write a good essay.
Hope that helps.
You could talk about oligopolies/monopolies and why they may not lead to Pareto efficient outcomes in a free market. What could the government do to achieve higher social welfare in these cases? Which type of competition will lead to a Pareto efficient outcome?
If you touch on a few of these issues, then I'm sure that you can write a good essay.
Hope that helps.
Original post by nahinahi
I feel lost with this question “to what extent will the problem of scarcity be solved through the free market” Im not sure what fors and against to use
to me 'the problem of scarcity' sounds like they're referring to the basic economic problem (how to allocate scarce resources in a way that satisfies our unlimited wants and needs)
so essentially its free market against a more state-controlled approach (with command economies being the extreme version of this)
Free market economic system | Reference Library | Economics | tutor2u
Government Intervention in Markets - Economics Help
these might help you form your arguments
definitely talk about market failure and government failure though
Reply 3
Original post by klafow
to me 'the problem of scarcity' sounds like they're referring to the basic economic problem (how to allocate scarce resources in a way that satisfies our unlimited wants and needs)
so essentially its free market against a more state-controlled approach (with command economies being the extreme version of this)
Free market economic system | Reference Library | Economics | tutor2u
Government Intervention in Markets - Economics Help
these might help you form your arguments
definitely talk about market failure and government failure though
so essentially its free market against a more state-controlled approach (with command economies being the extreme version of this)
Free market economic system | Reference Library | Economics | tutor2u
Government Intervention in Markets - Economics Help
these might help you form your arguments
definitely talk about market failure and government failure though
You're correct. I probably shouldn't have recommended touching on Pareto efficiency as it's not directly related. In that case, the focus should be more on potential market failures, as you suggested.
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