Describe two benefits to the consumer of the free-market system.
The benefits of a free-market economic system have long been identified as (A) lower prices for goods and services and (B) higher-quality goods and services for the consumer.
In a free-market system, individuals are free to go into the business of their choice, assuming compliance with any regulatory and licensure requirements that may exist, and consumers are able to choose among competing manufacturers or service-providers. When companies are forced to compete for business, they are compelled by the pressure of competition to improve the quality of their product in order to make it more attractive to consumers. While qualitative improvements are implemented, that same competition acts as a check on prices charged to consumers. When one wanders the aisles of an American grocery store, one cannot help but notice the variety of options available for purchase. There might be four different brands of the same product, like laundry detergent or breakfast cereal. Consumers are free to choose the option that best fits their needs and budgets. Manufacturers know that consumers enjoy these options and that they must maintain a certain level of quality along with remaining competitive in terms of price.
These, then, are the two main advantages of free-market economic systems. While the concept of a free-market system suggests minimal government involvement in the marketplace, however, such involvement is essential to protecting the integrity of such a system. History has demonstrated that, absent government-imposed restrictions on the ability of companies to completely dominate a marketplace, the result will invariably be the emergence of a monopoly or duopoly. The whole point of a free-market system being competition, the emergence of one or two corporations dominating a given market automatically diminishes competition and the advantages that accrue from competition. That is why laws exist, for example, in the United States, intended to prevent the emergence of a monopoly for a given good or service that would force the public to purchase from that single supplier at whatever price and at whatever quality that provider selects.
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There are many benefits we enjoy because of the free market system. One of these is competition. Because of competition, customers will usually receive a competitive price for the products they buy. When presented with a choice between two similar products, consumers will usually buy the less expensive product. Thus, a competitive environment helps to control prices. By having competition, businesses also need to treat their customers well. Businesses with poor customer service will lose their customers to competitors. A second advantage of a free market system is that prices are determined by the forces of supply and demand instead of being artificially set by the government. This usually means lower prices for consumers. Another advantage of the free market system is people are free to develop new ideas. This allows for the development of new products and services because people are willing to take a chance and provide something new. The government does not drive this, but instead people with an entrepreneurial spirit drive this process. This benefits consumers as well. There are many benefits to the free market system.
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