ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A free-market economy is a crucial aspect of capitalism. In such an economy, the distribution of products takes place as per market demand and supply. To put it simply, the price of a product rise when its demand rises. This is referred to as ‘the law of demand’ by economists.

Detailed explanation-2: -capitalism, also called free market economy or free enterprise economy, economic system, dominant in the Western world since the breakup of feudalism, in which most means of production are privately owned and production is guided and income distributed largely through the operation of markets.

Detailed explanation-3: -The production of goods and services under capitalism is based on supply and demand in the general market-known as a market economy-rather than through central planning-known as a planned economy or command economy. The purest form of capitalism is free market or laissez-faire capitalism.

Detailed explanation-4: -A market economy has freedom of choice and free enterprise. Private entrepreneurs are free to get and use resources and use them to produce goods and services. They are free to sell these goods and services in markets of their choice.