2.4 - Signposting

Question 1

Acronym for points in favour of free markets?

Answer 1

CEDJIF

C: Point 1 in favour of free markets - Competitive markets and efficient allocation of resources
E: Point 2 in favour of free markets - Entrepreneurship, competition, and innovation
D: Point 3 in favour of free markets - Leading to dynamic efficiency
J: Point 4 in favour of free markets - Creation of a large number of jobs
I: Point 5 in favour of free markets - No government intervention
F: Point 6 in favour of free markets - Risk of government failure

Question 2

Acronym for points against free markets?

Answer 2

FAILV

F: Point 1 against free markets - Markets can fail in efficiently allocating resources
A: Point 2 against free markets - Allocating resources through the market can exclude individuals on low incomes
I: Point 3 against free markets - Incentivizes profit-seeking over quality, health, and safety concerns
L: Point 4 against free markets - New firms entering a market can lead to job losses and unemployment
V: Point 5 against free markets - Volatile prices cause problems in some markets

Question 3

Acronym for evalution for free markets?

Answer 3

QOIN

Q: Point 1 in the evaluation of free markets - Question whether there is a market failure
O: Point 2 in the evaluation of free markets - Free markets could be able to find their own solutions to problems
I: Point 3 in the evaluation of free markets - Evaluate the risk of government failure with intervention
N: Point 4 in the evaluation of free markets - Solution depends on the nature of the good/service