Is every thing traded everyday in the US based on pure supply and demand theory?

Question

Hi..friend I wonder if the US economy is 100% free economy?
I have read an economics book before, there was an index told US economy is quite a free economy, but not 100%.
US seemed to be rated 8 of 10.(10 is 100% free economy)Many of the nondemocratic countries were rated 3 or 4.
US is still not 100%, because its post offices and something elses are gov't owned. There is one thing i am curious with, There are million kinds of things being traded everyday in the US. Are there some of the (consumer) goods' prices regulated to fix by govn't or to change(rise or fall) within a certain percentage. Are there goods not based on the pure supply and demand theory. Please help me with this question
thank Q I will appreciate it.

Answer 1

you kind of have it backwards. the economy is not based on supply and demand theory; the theory describes the economy. it may seem that it is a little thing but it really describes an important concept. it does not matter if an economy if free or not supply and demand theory can describe what is going on. we talk about the law of supply and the law of demand, people do not want more of a good if it is cheaper because an economy is free or using supply demand theory. It is just a fact that if something is cheaper people would like to have more of it.
Take your example of the post office. we can describe the market for mail delivery. the demand side is downward sloping the cheaper it is to mail something people will probably mail more (makes sense). on the supply side it is probably safe to say that any a point in time the more mail that needs to be delivered increases the cost of each letter (this is not so easy to buy eould need long answer to descibe this well). so in the market for mail delivery we have supply and demand. Now the gov steps in and controls the supply part (with the PO). and sets the price they charge at below what the price would be if the market was allowed to work. we can descibe what happens using supply and demand theory.
Hope that helped

Answer 2

Everything traded is traded based on the law of supply and demand. However, that doesn't mean its a free market. For some examples. Minimum wage is government price fixing of labor rates, government licensing of professionals is rigging the supply. Tariffs and special taxes on items like imported sugar drive up the price .

But supply and demand still apply in all economies. For the minimum wage example. Reduces the number of entry level positions available.

Answer 3

If any government attempts to regulate prices, it only creates longer lines when demand is high. Those willing to pay more deal with the Black Market, created and fed by government controls on 'legal' goods and services.
For instance; The price of illegal prostitution, drugs, gambling, and anything else is much higher than the same items, wherever said items are legal, because of the greed of gangs and racketeers, and the lack of police protection creates turf warfare, basically furthering gang related crime

No one can reasonably claim that legalizing vices of all sorts is dangerous to the public, because there are few case studies. We know the cost of trying to prohibit people from self-indulgence, though.-Astronomical.

Answer 4

First it must be noted that every economic entity has an equalibrium state relative to it's relative (and non-related) parts, government(s) run elements based on the desire for certain industrial effects(industry is used loosely in this context.As the concept of government is inherently inclusive of social economics in that the prime motivation of a governing body reflects it's goals reguarding it's duties to what it governs, and also it's responsibilities.
The result of core control of quality of service and cost reflects an industries effect on people, quality of related core services, in a democracy it means government operated utilities are responsible to the people that they serve, Postal and mail are probably incorporate governmentally because of an immediate effect on the functioning of prime elements of distribution, motivation and result. Almost all industries have governmental control in some respect,especially money(federal reserve notes)and education, as well as film, the objective of good governances is to ratify a behavioral state within the operation ,and regulate the impact of constituant industries.

Answer 5

Yes, There are many instances where supply and demand are not in control. One that comes to mind is government sponsored parks. I see them all around with no one using them.

Answer 6

True