ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand.

Detailed explanation-2: -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-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 economy, resources are owned by private individuals. The goods and services that are produced are not determined by the government. Rather, production is determined by businesses responding to the wants and desires of consumers.