Assignment 2
competitive private enterprise economy tends to have higher efficiency
Fallacies exist in our daily life, and economics seems suffered from this kind of problems the most compared with other subjects like physics, mathematics or medicine. According to Henry Hazlitt (1979), this is because of self-interest of groups and the persistent tendency of people. For the first one, in oder to pursue certain economic self-interests, some relevant groups would preach some policies which benefit themselves but are based on the expense of other groups. The persistent of men is that people are tend to focus on the immediate effects than in the long run or only consider the benefits of certain groups instead of the all. In his article, he reveals …show more content…
The first one is that private enterprise economy can efficiently meet individual’s wants. In competitive market economy, people can freely choose the products and how much they want to buy at the market price. However, according to the definition of economic scarcity (Zwane, 2012), peoples’ wants are always beyond the resource which can be used to meet peoples’ wants. The acquisition of resource needs to input cost, and when the amount of cost is fixed, the gain of resource is limited. Hence, the scarcity of resource decides that no matter in which kind of economy, private of public, men’s needs are always hard to …show more content…
There is a clear example is that during the British industrial revolution, the corporations that operated by private enterprises take an overwhelming proportion. Nevertheless, some unnecessary cost and waste can be caused in the competition between companies which would have negative effects on economic efficiency (Teitelbaum, 2010). And this theory is based on the assumption that private enterprises pursue the maximisation of profit as an independent entity, but the reality is that in many situations, the profit of enterprises and owners are not always unitive. Also, Brown and Simon (1978) pointed out that, in modern society, the difference between private and public firms is chronically overstated. Both private and public companies have motivations to reduce the cost of goods and services. Lastly, there is a trend of private companies that have a growing motivation to make effort in consumer innovation which would increase the cost. The success of these high-tech companies, like Google and Apple, is the best evidence for
competitive private enterprise economy tends to have higher efficiency
Fallacies exist in our daily life, and economics seems suffered from this kind of problems the most compared with other subjects like physics, mathematics or medicine. According to Henry Hazlitt (1979), this is because of self-interest of groups and the persistent tendency of people. For the first one, in oder to pursue certain economic self-interests, some relevant groups would preach some policies which benefit themselves but are based on the expense of other groups. The persistent of men is that people are tend to focus on the immediate effects than in the long run or only consider the benefits of certain groups instead of the all. In his article, he reveals …show more content…
The first one is that private enterprise economy can efficiently meet individual’s wants. In competitive market economy, people can freely choose the products and how much they want to buy at the market price. However, according to the definition of economic scarcity (Zwane, 2012), peoples’ wants are always beyond the resource which can be used to meet peoples’ wants. The acquisition of resource needs to input cost, and when the amount of cost is fixed, the gain of resource is limited. Hence, the scarcity of resource decides that no matter in which kind of economy, private of public, men’s needs are always hard to …show more content…
There is a clear example is that during the British industrial revolution, the corporations that operated by private enterprises take an overwhelming proportion. Nevertheless, some unnecessary cost and waste can be caused in the competition between companies which would have negative effects on economic efficiency (Teitelbaum, 2010). And this theory is based on the assumption that private enterprises pursue the maximisation of profit as an independent entity, but the reality is that in many situations, the profit of enterprises and owners are not always unitive. Also, Brown and Simon (1978) pointed out that, in modern society, the difference between private and public firms is chronically overstated. Both private and public companies have motivations to reduce the cost of goods and services. Lastly, there is a trend of private companies that have a growing motivation to make effort in consumer innovation which would increase the cost. The success of these high-tech companies, like Google and Apple, is the best evidence for