Define free markets. Does a perfectly competitive market qualify as a free market?
What will be an ideal response?
A free market can be defined as a market structure where all exchanges are voluntary. There is very little government control or coercion in the market and the government does not tell market participants what to do. In a perfectly competitive market, the equilibrium price and quantity are determined through the forces of demand and supply, and without any government intervention. Hence, perfectly competitive markets qualify as free markets.
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To encourage invention and innovation, the government provides
A) patents. B) public franchises. C) government licenses. D) natural monopolies. E) easily obtained ownership barriers to entry.
A company succumbs to a wage increase demand without any changes in the productivity of labor, price of the product, and the total output sold. Which of the following would happen?
a. Total revenue of the company will fall. b. Investment by the company will increase. c. Profit per unit of the product will fall. d. Average profit per unit will increase.