Free market economy

A free market economy

A free market economy is one in which the forces of demand and supply govern the production and supply of products. In other words, massive profit margins fuel this type of economy. Economists believe that a free market economy is a self-regulating system. Businesses make decisions and set production patterns in this economy.

In contrast, state-directed economies

In contrast, there are other economies that are state-directed, with the state driving production. Businesses do not make decisions about the creation of goods and services. Yet, free market economies are typically confronted with numerous obstacles, as the self-regulating features fail to achieve their aims (Hemsley-Brown, 2011). In this way that Apple Company has failed to achieve the goals of the free market, and this could lead to the fall of the company. Unless proper regulations and policies are put in place to salvage the situation in the company, the Apple Company will surely fail. The free market theory can no longer salvage the situation at the Apple Company (Swartz, 2016). There is a need for an external intervention into the company, and possibly by the government so that the giant and reputable company can save itself.

Market Failure

One of the largest challenging facing free markets is the market failure. Market failure occurs when the market can no longer support the free buying and selling of goods.in this way, the market fails to be efficient. The market will start when few companies gang up to monopolize the market. They use rudimentary means to frustrate other businesses, and in this reference, Apple is the victim of free market economy (Swartz, 2016).

Government interventions through subsidies

One of the main ways to salvage the situation at the apple company is through direct government interventions through the use of subsidies. Subsidies are usually given by the government to sectors or companies to help them come out of economic hardship. Apple Company needs to be subsidized by the company so as to save the economy and also save the job for thousands of employees employed by the firm. Subsidies may include things such as tax relief for the company. The government can also directly induce financial aid to the business so that the company can have some leveraged funds for their operations (Hemsley-Brown, 2011).

Drawbacks of subsidies

However, in as much as subsidies are recommended to salvage some of the failures of the free market economy; this is associated with many drawbacks. While implementing subsidies by the government, resources are sacrificed and mainly the taxes from one sector to another. Subsidies do not promote free trade and competition in the economy.

The possibility of government intervention

Critically at economy an angle, one may say that the intervention move by the government to rest the case at the Apple Company may not work. This because of the externalities effects. In this case, at sometimes the intervention into an economy by the government may be dysfunctional. The intervention may fail to bring about the desired purpose of averting the market failure in the economy. Precisely, government intervention although recommended for solving a market failure, may not work at sometimes (EconomicsHelp, 1929).

The need for government intervention

However, under special cases and based on the performance of a company in the economy, the government must step in to help rescue the company. In this way, however costly it is to the economy, the government must use subsidies to salvage the company. Apple Company has been known to promote much toward the economy. Therefore am of the opinion that the government intervenes to avert the situation at Apple.

References

EconomicsHelp. (1929). Market failure. Retrieved February 10, 2017, from http://www.economicshelp.org/micro-economic-essays/marketfailure/

Hemsley-Brown, J. (2011) ‘Market heal thyself: The challenges of a free market in higher education,' Journal of Marketing for Higher Education, 21(2), pp. 115–132. doi: 10.1080/08841241.2011.623832

Swartz, J. (2016) Apple faces challenges from every flank. Available at: http://www.usatoday.com/story/tech/news/2016/01/20/apple-enters-earnings-season-facing-challenges-every-flank/78037798/ (Accessed: 10 February 2017)