Pros And Cons Of Market Economy

A market economy involves having a supply and demand type system involving the law of diminishing returns and comparative advantage. In simple terms this basically means that the nations sharing their goods must know how much of their product they need to manufacture at a time not only to keep up with the demand but also to not go overboard and have too much of their product, because goods don’t remain a constant value if you have more of them, and lastly if both nations specialize their trade then both will have great economic output. But what are the pros and cons about this kind of economy? Sumner M. Rosen writes, “A definition of ‘market economies with a human face’ might begin with the normative ethical view that both the benefits and pain of economic progress should be equitably shared among social and economic classes, racial and ethnic groups, men and women, and different regions of the economy and …show more content…
Arneson is saying is that if you keep the prices of products at an average, you don’t risk having a stampede. In a market economy this tends to be true, because if you either have too much of a product it looses its value and if you have too low of a price tag on your products that makes the consumer believe the product is cheaply made. This is one of the difficulties a business has to conquer when making trading deals.
But there are both pros and cons to a market economy. One of the pros is that a market economy’s competition raises innovation. It does this because with the flow of trade, goods and services along with great new ideas are circulated.
Since businesses have to compete with their overseas competitors, American companies make sure to take note of all their successes and failures that take place in the global marketplace. This then benefits the consumers because the competing companies are either trying to keep up with the leader of the race or make a better/newer product. In turn, this creates a need for