Taxes and policies is what make producers to hesitate from entering and starting a business in a free market. Unlike in a monopoly, most of the constraints prevents producers from even entering the market, yet for those who have the chance to enter are most likely to gain a much higher percentage of profit compared to a company that sells and distribute the same product in a free competitive market. However, the policies and regulation in a free market is what protects the consumers from dangers. Producers who sell food products are monitored by the government on the quality of the food that is produced, so that the people or consumers health are protected. Producers who sell motor vehicles have more constraint in order to insure the safety of the people.
If one imposes trade barriers on the imports of another country’s goods, the country will face retaliatory action by another. This leads to a decrease in the volume of global trade. The cost of goods increases for both countries and the long-run average supply of importing new and innovative technology gets affected. Protectionism acts as a tax on exports, meaning their costs drive up every time tariff or non-tariff barriers are imposed. This leads to higher costs for exporters.
In the end, free education is never free as the youths will have to pay back for the tuition with excessive taxes. Also, offering free tuition will lower the value of education, and this will translate to lower productivity in the job market. Human beings tend to value the things that they have worked for and therefore offering the education at zero costs means that the students may never take their studies seriously. The government can also adopt different alternatives to the free education without necessarily hurting the economy. Having so many graduates will impact negatively on the job sector.
The companies that are experiencing a steady decline in free cash flow could be going through a period of declining growth and facing liquidity problems. Without free cash, a company may be unable to pay off its debt and may even have to borrow more debt in order to finance its growth requirements. It will not be able to pay dividends, pursue opportunities for expansion through acquisitions or develop new products. Investors should also be aware that companies can influence their free cash flow by lengthening the time they take to pay the bills (thus preserving their
If the change in quantity demanded is greater the change in price, the good is price elastic in nature. If the change in quantity demanded is lesser than the change in price, the good is price inelastic in nature. It is measured by the formula:- PED= (%of change in good X demanded)/ (%of change in price of good X) Price Elastic products include goods which have a large number of subsidies in the market, giving the customer more power to choose any firm based on the different prices. Price Inelastic products are goods which are unique in nature and are generally produced by very few firms. Customers don’t have much power and are compelled to buy in the give price.
Economic barriers consist of economies of scale, technological superiority, and undifferentiated products. Economies of scale. Economies of scale refer “to the phenomenon where the average costs per unit of output decrease with the increase in the scale or magnitude of the output being produced by a firm” (OECD, Glossary of statistical terms, 2003). In some markets, the profits for high volumes of goods are exaggerated. Large companies are often able to under-cut competitors’ prices, drive them out of the market, and then raise prices again.
Free Trade is a scheme followed by some international markets in which the countries’ governments allow imports from, or exports to other countries without any restrictions. Countries that engage in Free Trade usually lower trade barriers such as tariffs and import quotas. Many economists recommend Free Trade as the best way to maximize the potential of the global economy because it generates economic growths, fosters economic freedom, enables foreign direct investment and so on. However, some economists argue against Free Trade after highlighting its disadvantages. The following are the disadvantages of engaging in Free Trade; 1.
In Europe, their label cost is higher than Malaysia because they need to charge the cost of import/ export. But the quality couldn’t attain the international company’s requirement. Thus, this company just request on their product quality because the cost is lower than the international company, they hope that their quality of product will be the same as with the international company. Previously, Precise Harvest got the chance to cooperate with the country such as Japan, German, America, Taiwan, Thailand and China. It is because the international company doesn’t have any branches or factory and a fabrication team in Malaysia and the cost are much lower.
Singapore, New Zealand. 2 Characteristics of a free economy are Private property- gives the freedom to use their own property to benefit from a profit, and Freedom of choice- owners, consumers etc are allowed to conduct business in the free market(buy, sell, trade). A planned economy is one in which the government has control over all the resources and determines the prices as well. The government controls all the processes from distribution to prices and what and who can produce and to whom. 2 characteristics of this are goods andn services will be affordable to all since it is governed and more employment opportunities since the government seeks to give employment to everyone.