Knowledge on Consumption Market Analysis

Question: Dioscuss about the Knowledge on Consumption Market Analysis. Answer: Introduction: Milton Friedman, famous American economists and receiver of Nobel Memorial Prize has provided the world great knowledge on consumption analysis, stabilization policy and monetary theory (Friedman 2006). Free to Choose is one of his famous books, co-authored by his spouse Rose Friedman, where they tried to analyze the principles of free market. This book consists of 10 chapters which were later filmed into television series. This video deal with only the first chapter named, The Power of the Market (youtube.com 2010). According to his view, all the people living in a society are benefitted from existence of free market that is a market devoid of any stringent rules and regulations as imposed by the superior authority. According to Friedman, there is existence of digression in economy. According to him the principle of command implies harmonizing the entire system consisting of people, their choices, entire supply and demand of the economy by exerting pressure from the superior authori ty (Friedman and Friedman 2012). As an example, he mentioned Soviet Union. On other side, he talks about voluntary economy which talks about participating in economic activities without force or coercion from above. An interesting point has been highlighted in the video which states that none of this economy can work independently and existence of any one of them implies just a dominance of that system. He also talks about the way in which the automatic mechanism of price system works (Piketty and Ganser 2014). According to him, there are three ways in which the market gets regularized. The channels of regularizing the price system are: Transmission of information Incentives to use methods that are profitable Determination of income distribution I would like to agree on the notion as pioneered by Mr. Friedman. The reason behind my agreement is briefly discussed here. I definitely agree on the point that information is an important component of any economy to work. For e.g.: Say a person living in city A is a plumber by profession. City A, also do not have any problem in their pipelines for the last 3 months whereas City B has severe problems with no plumber in the locality. Then the person from City A will remain unemployed whereas problems will exist in City B due to dearth of skilled people. Transmission of proper information during proper time can become mutually beneficial for both the person and the city. People always worked better when they know that their work will provide them some extra payoff. It is quite obvious that firms always seek to maximize their profit. They can maximize it only if they can minimize their production cost. Innovation can help them reduce this cost and hence they have incentive to use new innovative methods in their production. For e.g.: Any worker is bound to work for 8 long hours. If he is given any incentive in monetary terms, he may work more extra hours or may improve his own efficiency thereby benefitting the company. Similarly income distribution of a country affects the overall economy. If there is high inequality in income distribution within any company, organization or country, then the authority will face serious chaos from the working class. I, hereby strongly support the fact represented by Milton Friedman in his book and television series. References: Friedman, M. and Friedman, R. (2012).Free to Choose- A Personal Statement. [online] alabamapolicy. Available at: https://www.alabamapolicy.org/wp-content/uploads/API-Research-Friedman-Free-to-Choose.pdf [Accessed 16 Dec. 2016]. Friedman, P. (2006)."Free To Choose" (1980) a TV Series by Milton Friedman. [online] Miltonfriedman.blogspot.in. Available at: https://miltonfriedman.blogspot.in/ [Accessed 16 Dec. 2016]. Piketty, T. and Ganser, L.J., 2014. Capital in the twenty-first century. YouTube. (2010).Free to Choose: Part 1 of 10 The Power of the Market (Featuring Milton Friedman). [online] Available at: https://www.youtube.com/watch?v=D3N2sNnGwa4 [Accessed 16 Dec. 2016].