Allocation of Resources- Will a Capitalistic Free-Market Economy Always Optimally Allocate Resources?
For my research I think that a free-market economy will in fact, always optimally allocate resources. Google defines a free market as 'An economic system in which prices are determined by unrestricted competition between privately owned businesses'. In a free market there are many, many stake holders who want certain goods and services and they are willing to pay for those goods and services. Therefore when there is a free market resources are allocated in a way that the person who is willing to pay the optimal highest price gets the good. I think that this is a good way to allocate resources. Is it the fairest way to allocate resources? NO! Most definitely not since there is an un- proportionate amount of people who have money and those who do not have money. This means that is there are goods that are being allocated then poor people will get the 'leftovers', if any at all. But this does not mean that the goods are not being allocated in an unprofitable way. This in fact means the exact opposite.
Personally I am all for a free market economy. I think that it is a good market that is able to (for the most part) self regulate itself, thus keeping the government out, in a good way. Also in a free market economy buyers can buy any commodity that they want to at whatever price they want to pay. While on the other hand producers can produce almost whatever goods they want to. Another benefit of a free market economy is that price is determined by supply and demand, and there are not price ceilings or price floors.
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