Market System

ECONOMICS FOR BUSINESS AND MANAGEMENT BC115008S

SID: 1118562

Q1:"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices" (Adam Smith, 1776, Book 10, Ch. VIII).

Often, as Adam Smith noted above, the marketplace is influenced by the growth of monopolies, mergers, and cartel-type activities which often use their market power to the disadvantage of consumers.

a) Examine the arguments in favour of a free-market system of resource allocation

b) Explain how market failure can occur and suggest how the government in a country of your choice has sought to correct those market failures.

1.0 FREE MARKET SYSTEM

''If you leave the Market going alone, it will...