Question

Specify the assumption of the day's law of Market

Answer 1

Answer:

1. Optimum Allocation of Resources:

There is optimum allocation of resources as they are allocated to different channels of production in terms of proportionality and equality of marginal products.

2. Perfect Equilibrium:

Commodity prices and factor prices are determined in perfect equilibrium of their demand and supply.

3. Perfect Competition:

There is perfect competition prevailing in the commodity market as well as factor market. Thus, commodity prices are equal to average costs and factor prices are equal to marginal productivities.

4. Market Economy:

There is free enterprise economy

5. Laissez-Faire Policy of the Government:

There is no government intervention in the economic field. The government follows a laissez-faire policy to facilitate automatic adjustment and smooth working of the market mechanism in the capitalist economic systems.