The Free Markets and its Effect
“A free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.”
In the video,” From the Expert” an illustration is presented of an apple tree and the height of the apples needed for harvesting. The video goes to show how picking the lower hanging apples yield a higher profit than the apples that are midway up the tree. Also the apples on the very top of the tree, although some of the best apples, due to the cost of the labor to harvest them they do not yield a profit and should not be picked. Marginal cost …show more content…
Money makes the world go around. In a free market, there are downsides with wanting high profit, there can also be greed and corruption. Enron an energy company out of Houston, TX in 2002 was the 6th largest company in the world and by 2004 was indicted on 11 counts of security, banking fraud. In 2002 SOX was passed in the United States. “Widely deemed the most important piece of security legislation since formation of the Securities and Exchange Commission in 1934, the landmark Sarbanes-Oxley Act of 2002 was born into a climate still reeling from the burst of the high-tech bubble and fraud scandals at Enron and WorldCom. “ Sarbanes-Oxley Act of 2002 (SOX) is an act passed by U.S. Congress in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations. The SOX Act mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.” But regulations, cost money to enforce and implement and this is another cost which in turn impacts profits. The act today has public companies obtaining independent audit of their internal control practices. Even though costly and an administrative challenging to maintain, “Markets have been able to use the information to assess companies more effectively, managers have improved internal processes, and the internal control testing has become more cost-effective over time,” according to Srinivasan. SOX a government regulation, has added value in companies adhering to the same accounting practices. But it’s also another regulation which must paid for and adhered
“A free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.”
In the video,” From the Expert” an illustration is presented of an apple tree and the height of the apples needed for harvesting. The video goes to show how picking the lower hanging apples yield a higher profit than the apples that are midway up the tree. Also the apples on the very top of the tree, although some of the best apples, due to the cost of the labor to harvest them they do not yield a profit and should not be picked. Marginal cost …show more content…
Money makes the world go around. In a free market, there are downsides with wanting high profit, there can also be greed and corruption. Enron an energy company out of Houston, TX in 2002 was the 6th largest company in the world and by 2004 was indicted on 11 counts of security, banking fraud. In 2002 SOX was passed in the United States. “Widely deemed the most important piece of security legislation since formation of the Securities and Exchange Commission in 1934, the landmark Sarbanes-Oxley Act of 2002 was born into a climate still reeling from the burst of the high-tech bubble and fraud scandals at Enron and WorldCom. “ Sarbanes-Oxley Act of 2002 (SOX) is an act passed by U.S. Congress in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations. The SOX Act mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.” But regulations, cost money to enforce and implement and this is another cost which in turn impacts profits. The act today has public companies obtaining independent audit of their internal control practices. Even though costly and an administrative challenging to maintain, “Markets have been able to use the information to assess companies more effectively, managers have improved internal processes, and the internal control testing has become more cost-effective over time,” according to Srinivasan. SOX a government regulation, has added value in companies adhering to the same accounting practices. But it’s also another regulation which must paid for and adhered