Question

A potent tool for economic development and socio economic welfare is" competition in markets " which promotes economic efficiency.Explain?

Answer 1

Competition in markets forces firms to maximize productive and allocative efficiency in order to maximize profits, which results in economics efficiency.

Answer 2

This can only take place when government policy supports market competition in its regulation of the market place controlling and effectively managing monopolistic tendencies of bigger firms against smaller ones. Creating an open economy where individuals can put national resources into different use as government regulates market and competitive behaviour through appropriate legislation and monitoring. This can also help in promoting different entrepreneurial initaitives within an economy by providing start-up incentives to small and medium scale entrepreneurs within the economy.