According to Tomasi (2012), the free market framework is considered where decisions on resource allocation are determined by the market forces of demand and supply. In this form of market framework, there are no forms of government interventions. Both retailers and consumers determine the prices and output in a country’s economy. Government interventions are perceived to happen when governments impose regulations, taxes, and subsidies. This is aimed at reducing inequalities and guarantees economic equality created by the market forces of demand and supply. Interventions integrated by the government are aimed at capitalizing on social welfares.
In the free market, unlike in government interventions, there are regulations pertaining to supply and demand that assists in controlling the rate of production. The clients have the right to make economic pronouncements, and therefore the framework decreases inequality. Another critical method reducing poverty and disparities is by offering freedom to every individual with no administrative expenses. This helps individuals generate good profit margins. Another essential contribution of free markets is providing an opportunity to exercise their innovative skills. This is enhanced by assessing the consumers’ demands and market trends, resulting in the use of innovative expertise in creating products.
How people in a free market economy, acting in their self-interest, can better those around them
One of the ways that a free market economy system can better those around them is by offering customer liberty to select what they free desire. Customers have the ability to make their own voluntary selections. Another way involves the setting up of optimal resource allocation. The framework guarantee that customers have the ability to obtain goods and services efficiently. It stimulates a competitive market, therefore, promoting the growth and development of an economy. This promotes those around the market to attain substantial profit margins hence eradicating abject poverty.
