Policymakers in the government can respond to the monopoly problem by trying to make industries more competitive, regulating the behavior of monopolies, turning some private monopolies into public enterprises, or do nothing. Price discriminate means the exactly same product could sell to different consumers for different prices, even though the costs of producing for the products are the same. Price discrimination is impossible when product is sold in competitive markets. For a firm to price discriminate, it must have market power. There are three lessons to be learned about price discrimination are price discrimination rational strategy for a profit-maximizing monopolist, price discrimination requires the ability to separate customers according to their willingness to pay, price discrimination can reduce the inefficiency inherent in monopoly.
It is often considered that the Democratic party is more for the people and the Republican party is for the wealthy and those able to provide for themselves through free enterprise. Based upon economics, the Republican party feels as though the United States has established its dominance and greatness through free enterprise. They believe that innovation and economic growth has come from it. The Democratic party views the economy as too complicated for the everyday person hence why they feel the government should aid in all business decisions through the establishment of labor unions. The main contrast here is that
Neoliberalism refers to the concept of restricting government involvement in stimulation of the economy, allowing the ‘invisible hand of the market’ to dominate, believing this will lead to greater economic prosperity and growth. The model stresses the efficiency of private enterprise, liberal trade and free markets and therefore looks to maximise the role of the private sector in leading the economy, rather than the public sector. Of course there is an element of overarching government regulatory control in place however the model is very much capitalism driven. One of the most prominent factors of neoliberalism is the rule of the market. As mentioned previously, Adam Smith, a highly regarded economist, demanded that in order for economic success, the”invisible hand of the market” must be in control, rather than the government.
Power can lead anyone to be selfish. This is why we have to keep them contained. Andrew Kohut in his research paper “The people and their Governments” states “Rather than an activist government to deal with the nation’s top problems, the public now wants government reformed and growing numbers want its power curtailed. With the exception of greater regulation of major financial institutions, there is less of an appetite for government solutions to the nation’s problems –
Marxists especially claim that liberal democratic governments favour disproportionately the interests of well funded, well organised pro-capitalist pressure groups because governments depend for their very survival on the profitability and efficiency of private capitalism on which in turn levels of employment, living standards and economic growth depend. Governments are therefore unlikely to introduce policies which are not supported by private enterprise. Furthermore pro-capitalist pressure groups are likely to be granted insider status which means that their negotiations with government are often secret which undermines both their own and the government’s accountability to the general public. Furthermore most pressure groups, apart from trade unions, are joined mainly by relatively affluent middle class people and most pressure group leaders [who may not be chosen by especially democratic methods] are even more likely to be middle class although we cannot automatically assume that pressure groups’ middle class members and leaders will not attempt to represent the interests of other social groups. However these points taken together do suggest that the poor and otherwise disadvantaged groups such as many disabled people and members of some ethnic minority groups are themselves relatively unlikely to be involved directly in pressure group activity and relatively more likely to be represented by under-funded outsider pressure groups which despite their best efforts may be unable to greatly influence government.
Based upon social class and political power in public policy, the United States has proven to be a nation where the economy, society, and political system do not function in the same way for all of its citizens, and everybody works for the benefit of the few, and against the interest of the many. Professors Jacob Hacker and Paul Pierson argued in their book, “Winner-Take-All Politics: How Washington Made the Rich Richer – and Turned Its Back on the Middle Class” (2010), that changing tax rates has been a major factor underlying growing inequality. They claim that the globalization and technological changes are not the causes of economic struggles of the middle and working classes in the United States. Instead they blame a long series of policy changes in government that significantly favored the very rich since the late 1970s. Those changes were the result of, well-financed and well-organized efforts by the corporate sector to push government policies to lean in favor of the very wealthy.
Why do entrepreneurs play a central role in free markets? Entrepreneurs play a central role in a free market because without the entrepreneur there is no business/firm. Also they have to ensure that resources that have been purchase have been used efficiently in order to receive maximum profit. 5. Identify two areas of government regulation and explain why this can be seen as a bad thing for businesses.
A principle in which the suggestion is that the market should be proficient in providing society with all the goods and services that is needed. This should be done efficiently and through the markets relationship with the individual. Neo Liberalists believe that state interference could cause economic problems for its government as it offers a financial incentive without working, thus, delivering a pessimistic moral and social outcome (Powell and Hewitt, 2002). Additionally, there should be an emphasis on individual choice with a free market. With the choice of competition that the global market creates, there would be fewer restrictions on businesses to operate by the government.
Capitalism and communism have always been viewed as two opposing political and economic structures. First and foremost, capitalism is an economic system influenced by individuals and private organizations by which there is freedom of the market. Communism however, is defined as an economic and political system whereby all resources are collectively owned and governed by the state. Even though communism is subjected to bringing about ‘declining suffering of public condemnations’; still, it is a maintained political system within various Countries. So could communism be a practical idea?
Capitalism Capitalism is an economic and political system where economy production is controlled by private owners and consumers instead of the government. The theory of capitalism was created by Adam Smith, author of “The Wealth of Nations” to achieve economic freedom. He reinforced the term “Laissez- Faire” meaning the government should not interfere with the economy because the “Invisible Hand” or supply and demand will naturally set the prices and quantity. Consumers’ actions influence business owners’ decisions on what to produce, how to produce and for whom to produce. Capitalism is most often seen in a market economy.