When people talk about the merit of Adam Smith's "invisible hand," "laissez faire," and how government should leave the market alone and it is only then the economy will work at its the best, the market they are referring to (whether or not they know it) is the perfectly competitive.
But how common is perfect competition really in real life?
What were the common or are the common examples of perfect competition? And think about whether they satisfy the criteria of perfect competition. If they do, do you think these constitute the majority or minority of markets we interact with in the real world? If they don't, in what ways do they fail to qualify? If even the typically used examples do not meet the criteria, what does it say about the prevalence of perfect competition in the real world and, in turn, the validity of the arguments above? Does that mean that the government has its justification for meddling with the markets all the time? Where do we draw the line and how do we determine a healthy balance?
When people talk about the merit of Adam Smith's "invisible hand," "laissez faire," and how government should leave the market alone and it is only then the economy will work at its the best, the market they are referring to (whether or not they know it) is the perfectly competitive.
But how common is perfect competition really in real life?
What were the common or are the common examples of perfect competition? And think about whether they satisfy the criteria of perfect competition. If they do, do you think these constitute the majority or minority of markets we interact with in the real world? If they don't, in what ways do they fail to qualify? If even the typically used examples do not meet the criteria, what does it say about the prevalence of perfect competition in the real world and, in turn, the validity of the arguments above? Does that mean that the government has its justification for meddling with the markets all the time? Where do we draw the line and how do we determine a healthy balance?
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