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Advantages and Disadvantages of Free Market Economy
http://www.reportbd.com/articles/928/1/Advantages-and-Disadvantages-of-Free-Market-Economy/Page1.html
Super Admin

 
By Super Admin
Published on 1 February 2012
 
Advantages and disadvantages of free market economy.

Advantages and disadvantages of free market economy.
Free market economy

Advantages:
•    Price mechanism allows the resources to be allocated more efficiently
•    The profit motive encourages producers to be more competitive and innovative
•    Efficiency makes it easier to respond to the changes in demand and supply more quickly
•    May lead to higher economic growth compared to command economy
•    Wide range of goods are produced allowing choice for customers

Disadvantages:
•    Factors of production will be employed if only it's profitable to do so
•    Private firms may fail to produce certain goods
•    The free market may encourage the consumption of harmful goods such as cigarettes
•    Private firms may not take social costs into account
•    Gap between the rich and poor could widen