Demand & Supply Analysis and Choice of Economic System Essay

Demand & Supply Analysis and Choice of Economic System - establish ExampleThis essay discusses that a free merchandise place thrift is a market system where minutes between buyers and sellers are determined only by mutual consent. This excludes that one party gets the deal by duress or deception it also excludes the intervention of a third party like governing to force or prevent the market. A free market limits government intervention in the practise property rights, contract enforcement and verification of consent. The market economy means an economic system where decisions of production, ex heighten and assignation of goods and services is mainly determined using information derived from the free interaction of supply and demand completed by market forces. There are several limitations of market economic system to be implemented in economy. A free market can occasionally result in formation of monopoly, duopoly, oligopoly or a cartel. Such structures create dominance o f suppliers in the particular market to the disadvantage of buyers. For this reason, free market economy can potentially impinge on the rights of a certain segment in the economy. A fair exchange implies a relationship of equality between the persons concerned, which is absent in these scenarios. Sometimes, in a market economy the employer and the employee are not in a relationship of equality. The employer can attempt to tell terms to the employees, therefore, a safeguarding body is required to ensure payment of minimum wages and to enforce wellness & safety measures. Provision of Public Goods A free market economy cannot provide provision of pubic goods whose benefits are distributed over a very large population and cannot be directly traced. For instance, roads and subject defense cannot be provided by a cloistered enterprise. Therefore, some intervention is needed in the market economic system for these provisions (Grossman, 2005). Provisions for Safety Net A free market econ omy cannot provide social security to the citizens of the country. A market economic system cannot find mechanism to ravish funds from haves to havenots and to help citizens in the lower income groups to rise from the vicious wheel around of lower economic strata. State invention is essential for redistribution of wealth and income for functioning of a healthy society. miscellaneous Economic System A commingle economyis aneconomic systemin which many private companies and a strong public sector coexist. In other words it is a mixture of ideas ofthe market economy and planned economy. The reason some form of a mixed economic system in in place in almost all countries of the world is that mixed economic system fulfills the in a higher place mentioned shortcomings of a free market economy. Agovernmentcan promotefree enterprise era reserving certain areas of the economy through nationalization, or then it privatize all enterprises while creating a legal framework which limits action s which impinges on the rights of certain segment of the economy. Most countries today have a mixed economic system to a certain level. Question 2 Demand & Supply Changes in metal and Automobile Markets 2.1 - Impact on the Prices of Palladium Metal following Usage of Replacement Metals it is found that the alternate(a) metals will replace palladium in the process of production of an automobile. This implies a leftward shift in the entireness demand weave for palladium metal because less palladium will be demanded at distributively price level. This shift is depicted in the graph below by the movement of demand curve from D1 to D2. Since, the supply of palladium is dependent on the rate at which the metal is extracted from the ores, there is not change in the aggregate supply of the metal (Grossman, 2005). The aggregate supply