Microeconomic Principles Essay Example | Topics and Well Written Essays - 1000 words

Microeconomic Principles - Essay Example Private property exists in the free market economy, while there is no existence of private property in the command economy. Free markets promote important virtues and they, however are treated with less attention. Free markets promote integrity and cooperative values. A free market system has its reliance on property rights and provides the best possible opportunities for repeat exchange. The social market economy is a type of free market based economy, which is based on a free price system and private property. This also includes government regulation, which promotes competitive markets. But social inequalities or inequalities with respect to income are results of free market economies or free market price systems. Private property is completely different from personal property, because private property is considered as a means of production unlike personal property. â€Å"In addition, the free market performs a constant process of selection with respect to the ownership of capital † (Reisman 8). Another virtue of the free market price system is that this type of price system penalizes people for making irrational choices, especially with respect to financial loss. 2) President Barrack Obama has provided a number of speeches with respect to international trade.... Obama in his various speeches on international trade also said about various policies relating to various countries like, US should tighten its trade sanctions with Zimbabwe and how it should develop measures to increase trade with India. To shorten, Obama has released a number of speeches with respect to international trade. 3) Economists are critical of price floors and price ceilings. A price ceiling is the upper limit of the price of a commodity above which no seller can raise a price. Price ceilings are usually set below the market price of a product. Price floors are completely opposite to price ceiling. Price floor is the minimum price for a product and this is done to benefit the sellers. Both these measures are done in order to have a control over the price of products. Economist are critical of both price floors and price ceilings because somehow they viewpoint that these prices should be established through market equilibrium only. 4) A wage is compensation, typically fina ncial, received by employees in exchange for their work. Compensation in conditions of wages is specified to workers and compensation in terms of salary is given to employees. Compensation is an economic benefit given to workers in return for the services given by them. The labor supply largely resolved by population development and migration; i.e. as labor supply increases, population development increases. Labor demand mostly determined by the growth and size of the financial system, in terms of more economic development, more business actions, more jobs formed. The wages are mainly of two types, they are Market-determined or equilibrium wage and Government-mandated minimum wage. Market-determined wage means the level of