One of the most well-known examples of such voluntary action actually comes from outside the economic market: the development of language. Only by making individual consumers the main actors in the market will the proper value of goods and services, based on their demand and supply, be transmitted. This way, the market is left to individuals voluntarily pursuing their own self-interests. So although it might seem strange, the best way to ensure that the market works effectively is to leave it alone. Without the proper price transmitting information to consumers, they are unable to know how to spend their money in the most efficient ways. Government action therefore exacerbated the crisis. Because the price did not rise naturally in response to the shortage, as it would have done in a free market, consumers did not choose to conserve or find alternatives to gasoline. The direct result of this was a flood of people buying gas at the same time, leading to increased demand and further shortages. This is because when the government intervenes in the market, it distorts the signals that tell consumers the true value of a good or service.įor example, during gasoline shortages in the 1970s, the government limited the price that gas stations could charge to keep gas affordable. However, this is wrong in reality, government intervention creates confusion in the functioning of the market. Today, many people believe that governments should determine the price or supply of goods in the market.
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