ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The word “free enterprise” or “free market” refers to an economy in which the market, rather than the government, sets prices, products, and services. As a result, businesses and services are not subject to government regulation.

Detailed explanation-2: -One of the most important characteristics of a market economy, also called a free enterprise economy, is the role of a limited government. Most economic decisions are made by buyers and sellers, not the government. A competitive market economy promotes the efficient use of its resources.

Detailed explanation-3: -In free markets, also called laissez-faire economies, markets operate with little or no regulation.

Detailed explanation-4: -A free market economy is one without government intervention or regulation. In a purely free market, buyers and sellers arrive at prices based only on supply and demand.

Detailed explanation-5: -Government has the coercive power to maintain law and order, protect people’s right to own property and enforce voluntary contracts people enter into. In essence, government provides the umbrella under which the free enterprise system operates.