Question

What are some of the benefits associated with market economies, and what is responsible for generating those benefits?

Answer 1

Answer:

Some benefits associated with market economies are increased efficiency, production, and innovation. The gov’t is responsible for the increased efficiency.  The government is limited in how it regulates transactions within a market economy and most rules it enacts are to protect consumers, the environment, market participants, and national security. The limited role of governments promotes increased efficiency and free and increased competition. Next, the gov’t is also responsible for the increased production of goods. In any economy, people need money to purchase goods and services. In a market economy, this need leads to increased motivation because workers want to earn more money to supply their needs and to live comfortably. When people are motivated to work, there is increased productivity and output for the economy. In a command economy, where wages, levels of production, prices, and investments are set by a central authority or government, there is less worker motivation because no matter how much harder you work, you will not see any additional monetary benefit. The gov’t is also responsible for better innovation. A country with a market economy also has increased innovation. With money as the main motivating factor for firms and individuals, they look to create new products and technologies to generate higher incomes. In a market economy, firms and individuals are encouraged to innovate to gain a competitive edge. Competition usually leads to better quality products for consumers at lower prices because companies need to figure out how to attract customers. This allows them to innovate not only in the production of the good or service but also in its quality. Innovation leads to better technology that further improves society. So with this, the gov’t is mainly responsible for increased efficiency, production, and innovation.

Explanation:

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