ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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.

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: -In a free enterprise economy, business firms will produce the goods that consumers want to buy.

Detailed explanation-4: -Businesses (firms) in the Product Market are producers of goods and services in the circular flow model. They sell goods and services to households. They earn revenue in exchange for their goods and services.