Экономические системы. - 12 стр.

highly competitive in such an environment. New advanced products and low
prices are good ways to increase sales and profits. Since all firms are privately
owned they try to make the largest profits possible. In a free market individual
people are free to pursue their own interests. They can become millionaires, for
example. Suppose you invent a new kind of car. You want to make money out
of it in your own interests. But when you have that car produced, you are in
fact moving the production possibility frontier outwards. You actually make
the society better-off by creating new jobs and opportunities, even though you
become a millionaire in the process, and you do it without any government
help or intervention.
     Not surprisingly there are also problems. Some goods would be
underpurchased if the government did not provide free or subsidized supplies.
Examples of this type of goods and service are health and education. There are
other goods and services, such as defence and policing, that are impossible to
supply individually in response to consumer spending. Once defence or a
police force is supplied to a country then everyone in this country benefits.
     A cornerstone of the market system is that production alters swiftly to
meet changing demands. These swifts changes can, however, have serious
consequences. Imagine a firm, which switches from labour-intensive
production to one where new technology is employed in the factory. The
resulting unemployment could lead to social as well as economic problems.
     In a market economy there might be minimal control on working condition
and safety standards concerning products and services. It is necessary to have
large - scale government intervention to pass laws to protect consumers and
workers. Some firms produce goods and then advertize heavily to gain
sufficient sales. Besides wasting resources on advertizing, firms may also
duplicate one another’s services.
     Finally firms have to have confidence in future sales if they are to produce
new goods and services. At certain times they tend to lack confidence and cut
back on production and the development of new ideas. This decision can lead
to a recession. A recession means less spending, fewer jobs and a decline in the
prosperity of the nation.