The Scarcity Of A Resource

982 WordsOct 10, 20144 Pages
Free markets are defined as “A market (for a particular commodity, etc.) in which prices are not fixed or regulated; (chiefly with the) an economic system in which prices are determined by unrestricted competition between privately owned businesses” (Oxford English Dictionary, 2014). Classical economists believed that free markets; along with limited government, low taxes and protection of property rights were important to create a prosperous economy. Genetski, 2011, names some benefits of an economy making use of the free market system. Although complex, free markets use resources efficiently. The scarcity of a resource is determined by the price in which an individual will have to pay for it. For example, if a good or service is more expensive, then “a high price signals a product or resource that is relatively scarce compared to its demand” (Genetski, 2011, p. 14). The price that an individual is willing to pay for a particular item also signals the choices we make to the producers. This in turn, allows producers to know which products to make or services to offer, how to manufacturer the product and even whether to use foreign or domestic resources. Genetski, (2011), says “in a free market, hard-working conscientious workers that contribute to creating more value tend to get paid more than lazy, less conscientious workers” (p. 15). This will provide an incentive for workers to be more productive. There has been and will always be objections to using a free-market system;
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