Question

explain how markets do not work in a fair manner

Answer 1

When the number of seller are few and consumers are large and scattered then the producer have more bargaining power while consumers have less.In other words it can also be said that the producers can determine the price While consumer have to take the given price. This would lead to exploitation of the consumers as producers would have the power to charge high price for the commodity having less production.Sometimes producers produce lesser amount of products then what it is socially optimal which bring inefficiency in market. Here the consumer surplus is also low while producer surplus is high. Thus, it can be said that the functioning in such markets is not fair.

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Answer 2

Ans : Laws ensure that markets work in a fair manner by protecting the people from unfair practices.

The two examples are :

The government should regularly inspect the working condition and punish the violators. The frequently upgraded Minimum Wages Law ensures that workers are not exploited and over-worked by companies that hire them.

The government should monitor the activities of individuals or private companies if they are adhering to safety standards. Also, a law keeping check on the quality of production makes sure that sub-standard goods do not enter the market.