How is a free market regulated?

Question

A government question, not a big fan on this, so I just need a little bit of help. Thank you to those who are nice enough to help.

Answer 1

Free markets are self regulating (without gov't intervention laissez faire). It's all about supply and demand. When you make a product people want, they will buy it for a certain price. As the manufacturer of that product you will determine how much it will be by factoring in all the costs to make it ie., materials, employees, taxes, marketing (ads) etc. Based on that information you decide what price to sell it. If you price it low, many people can afford to buy it and you will make a profit. If you price it high, few or no one will buy it and you have 2 choices, lower the price or go bankrupt. People who buy are the demand side and you as the maker of the product are the supply side. The lower the price the higher the demand, and the higher the price the lower the demand. The perfect price is one where the manufacturer makes a profit while people can buy it at an affordable price.    

Answer 2

Although the first answerer has the basics of a free market down, in fact, regulation is absolutely essential to a free market.  It seems counter-intuitive, I know!  But absent market regulation, companies tend to consolidate into monopolies, hide information from the public, lock-in their employees so they can't work anywhere else (i.e., blacklisting), and create barriers to entry.  These are examples of "market distortions" which are harmful to the health of a free market society.  Thus, carefully and precisely applied regulation can help eliminate, or at least reduce, such market distortions, leading to a freer free market.  By the by, there is no such thing as an absolute free market, because you either have these or other distortions, or, you have market regulation.