Out Line The Advantages And Disadvantages Of Free Market Economy(price Determination With Market Forces)?


4 Answers

Danielle Joynson Profile
The free market system advantages and disadvantages range from a number of issues and benefits. Both the hindrances and the gains are outlined below:
  • Advantages of free market economy
There are two stand-out benefits of the free market economy. The first one is the fact that this system allows high levels of productivity and efficiency. For example, individuals and companies can create a product, however, due to the vast and competitive market; the product in question may not initially appeal to any market sector.
However, this then allows for improvements and alterations which highlight the fact that if something is not successful straight away, changes can always be made. There is always room for new products in a market that is constantly changing, so this allows the door to remain open for future developments.

Furthermore, a free market economy allows and encourages creativity and entrepreneurial skills. Within the market there are always openings for new and inventive products or services which could eventually lead to major exposure. As I mentioned earlier, there is room for new products all the time but this can alert a sense of creativity. In a sense there is no end to the amount of things that can be created in a free market economy.
  • Disadvantages of a free market economy
One of the main downsides of a market economy is the fact that it can become so competitive that smaller companies cannot compete with the bigger brands and so on. In this case, a company can thrive on creating new products but due to the high amounts of revenue they are making, they become the market leader and other companies do not have the chance to compete. This can be very detrimental towards companies who are struggling to get by in the industry.
Aisha Profile
Aisha answered
Following are the advantages of a free market economy:
- Ensures political and civil freedom
- Ensures economic freedom and transparency.
- Ensures competitive market
- The decision making is from bottom to top, so consumers have their say
- Consumers get their advantages in the form of competitive prices.

There are no specific disadvantages of this system as this system is totally in the favor of society and economy
thanked the writer.
Anonymous commented
There are many disadvantage
- unfair distribution of income scenes there are no government intervention.
-while some economist regard the free market Asa useful it simplistic model in developing economic polices to obtain social goods, others regard the free market as a normative rather than descriptive concepts, and claim that polices which deviate from the ideal free market solution are "wrong" even if they are believed to have some immediate social benefit
Anonymous commented
There are more disadvantages,
-market failure
-problem of free riding
-inequality of income distribution
Akshaya Kumar Jena Profile

  1. Efficient resource allocation

  2. Optimum production

  3. Boost to healthy competition leading to innovation


  1. Inequity in distribution

  2. Free-rider problem leading to sub-optimal social production

  3. Pioneer dominating the market

Anonymous Profile
Anonymous answered
Advantages of a free market economy

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