A free-market system is where the production of goods is dependent and guided only by laws of demand. This means that there exists none or close to no government intervention in the activities that precede the process of production. This market system proves to be beneficial in the following two ways:
- It provides an avenue for producers to decide what they want to produce.
They get a chance to fully immerse their ideas and interests without any government interference or any other avenue that may prove to be a hindrance. Since business people are innovative, this provides the perfect avenue for them to test the markets as much as possible until they strike a balance of their choice. By giving this freedom, businesses can come up with products that they have produced without any restrictions. The consequences prove to be of high quality, and these businesses can compete amongst themselves as each produces commodities that are top class.
Connection to free market
The free market gives them leeway to producers to have the sole goal of deciding which method of production is efficient at what time, the organization of resources to where their necessity is urgently needed, and also the most profitable way of distributing goods and services. With the government not in the picture, it becomes the role of the producers to conduct their research on the consumers’ needs on their own which helps them understand them more.
- Consumers dictate what they consume.
With this market system, the consumers can choose from various products from the producers as presented to them. They achieve this by evaluating different features of products and arriving at that which satisfies them the most. They also influence the prices of the commodities that are to be brought forward to them.
Connection to the free market
This market system gives consumers the power of choice because the government does not restrict any business to venture into this field. Therefore, all companies are given the same chance to convince the consumer with their quality, customer care services, and most importantly, the prices of the commodities. With this freedom, the customers decide who is to succeed in the market and who will fail. On the other hand, the price is a crucial factor. Without any regulations, the customers are left to determine which prices they are to be charged, which provides for the perfect avenue for bargaining without undermining any party.
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