ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a market economy, the producer gets to decide what to produce, how much to produce, what to charge customers for those goods, and what to pay employees. These decisions in a free-market economy are influenced by the pressures of competition, supply, and demand.

Detailed explanation-2: -A market economy is an economic system in which economic decisions and the pricing of goods and services are guided by the interactions of a country’s individual citizens and businesses.

Detailed explanation-3: -Key Takeaways Market economies utilize private ownership as the means of production and voluntary exchanges/contracts. In a command economy, governments own the factors of production and set prices and production schedules. In a market economy, prices are set by supply and demand.

Detailed explanation-4: -In a market system, consumers decide what goods and services are produced by means of their purchases. If consumers want more of a good or service and are willing to pay for it, demand increases and the price of the good or service increases. Higher profits then attract new producers to the industry.