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The UK - a free market economy?

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Introduction

The UK - a free market economy? Since the 1980s, the UK government has been trying to reduce its involvement in the economy and increase the role of the private sector.UK was quite clearly a mixed economy. Government will intervene and try to provide public services and other goods that can increase the consumer welfare. The government and the private sector work together to manage the economic affairs. The role of the UK government is not to compete with but to complement the government by providing the infrastructure so that economic activities can be carried out effectively and efficiently. The education and health were both provided by the government so as to increase the general living standard of the people. ...read more.

Middle

The government will try to reduce income inequality by imposing a progressive tax system where higher income earners are taxed more than the lower income earners. In this way, the gap between the rich and the poor will be narrowed. The rich will get richer while the poor will get poorer. Consumers are the ones who would determine and influence the types and quantities of good to be produced. Consumers are free to choose occupations they are qualified. They express their preferences though their ability to pay, in order to maximum satisfactions and minimum expenditure. Producers respond to consumers preferences and produce whatever consumers demand, in order to maximise profits and minimise costs. ...read more.

Conclusion

This is when only a single producer is necessary to undertake certain economic activities to avoid unnecessary competition. For example, in the bus industry, firms were allowed to compete freely on national and local routes. Similary, government support for research through contracts with companies making technologically advanced goods such as computers and military hardware illustrates how employment in private industry can be sensitive to state patronage. Thus people pursing their own self-interest through buying and selling in competitive markets helps to minimise the central economic problem of scarcity, by encouraging the efficient use of the nation's resources in line with consumer wishes. Lack of competition and high profits may remove the incentive for firms to be efficient. The government might enforce its plan even if they were unpopular. ...read more.

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