ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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.

Detailed explanation-2: -Key terms. In its purest form, a market economy answers the three economic questions by allocating resources and goods through markets, where prices are generated. In its purest form, a command economy answers the three economic questions by making allocation decisions centrally by the government.

Detailed explanation-3: -Individual producers and consumers provide the answers to the 3 basic economic questions. In a market economy who answers the 3 basic economic questions? Individual producers and consumers. Relies on profit motive, economic competition and supply/demand forces.