Economics and Government - Assignment Example

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Economics and Government

The market only stabilizes where demand is equal to supply and an equilibrium price is determined. Many sellers meet and each produces what he/she is best at hence quality goods are sold by willing sellers to willing buyers at an agreed price (Harford, 61-65). Q2: What does Harford mean when he says that in competitive markets, "Things are going to the right people”? In a competitive market, there is free allocation of resources although the consumers are the ones who determine how resources are to be allocated through their purchasing power. All the players in the market have a self interest; the producers maximize profits, the owners of factors of production get rewards, while the consumers get maximum utility. The consumers demand goods thus forcing producers to produce the goods and the producers in turn allocate factors of production in the production process. All the players in the market thus get what they deserve; profits, rewards, and utility. The buyers get what they can afford based on their income and wealth (Harford, 61-79). Q3: When Harford talks about the absence of a market for schools, he argues that people find a way to trade in access to schools---they use the property market. ...
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Name of student: Topic: Lecturer: Date of Presentation: Q1: How does the voluntary nature of trade imply that sellers and buyers each value the goods traded at the price for which they were traded? The voluntary nature of trade implies that the market is governed by price mechanism and that there are willing buyers and sellers…
Author : gerlachadah

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