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 (for reminders see Key Points: 2.1, 3.1, 5.4, 6.1, 7.1, 8.1 and 8.2). For a specific and intriguing example, review the analysis put forward by traditional neoclassical economists relating to the market price of oil as a solution to the problem of climate change, rehearsed on page 161.
