ABSTRACT
Throughout Part A, we emphasised that the market system allocates resources efficiently. We described how the price mechanism provides an incentive for firms to enter and exit markets in their search for profits, and how each market arrives at equilibrium. Indeed, up until the last chapter, the dominant theme has been that most economic problems can be resolved by allowing the free market to work (see Key Points: 2.1, 3.1, 5.4, 6.1, 7.1, 8.1 and 8.2). For one specific and intriguing example, see the argument put forward by traditional economists relating to the increasing price of oil as a solution to the problem of climate change, rehearsed on page 161.
