Describes how prices and wages change in free market econmy
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In economics, a free market is an idealized system in which the prices for goods and services are determined by the open market and by consumers. In a free market the laws and forces of supply and demand are free from any intervention by a government, by a price-setting monopoly, or by other authority. Proponents of the concept of free market contrast it with a regulated market, in which a government intervenes in supply and demand through various methods - such as tariffs - used to restrict trade and to protect the local economy. In an idealized free-market economy, prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy.
In economics, a free market is an idealized system in which the prices for goods and services are determined by the open market and by consumers. In a free market the laws and forces of supply and demand are free from any intervention by a gover
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There is no such thing as free market. Market created, maintained and arbitrating by government.
Government define rules of the market, created and provided currency for the market. Government controlling and maintaining value of this currency by taxes and by cost of government services. Government protect market with Brute Force with Police and standing army. Government providing court for members of market to resolve there problems with out resolving to private armies.
All laws, what defined what can and can not be sold is created and enforced by government. Government and market are inseparable.
So, How prices are defined depend on rules enforced by government. Competition is actually rare occurrence in contemporary markets. Most prices defined by monopoly or small cortel of biggest corporations. Monopoles establish prices as function of maximising profits, basically maxim that market can bear. Same true for cartels. Anti Monopoly laws are not used anywhere, even they are on books of most countries.
Price of workforce again define by players with most power, Employers. They define your working condition and salary which will be minimum you can tolerate and work productively. It somethat ameliorated by government by minimum wage laws, workplace safety laws and laws that let you sue employer. Holiday and vacation time laws. Time when Unions had equal power with employer in wage negotiation is long gone.
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