ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -In a market economy, prices are set by the decisions of thousands of consumers and producers, each acting in their own self-interest. The profit motive and competition between businesses provide an incentive for producers to deliver the most desirable, cost-effective products at the best possible price.

Detailed explanation-3: -Consumer sovereignty is the economic concept that the consumer has some controlling power over goods that are produced, and the idea that the consumer is the best judge of their own welfare.

Detailed explanation-4: -Private property, freedom, self-interest, competition, minimum government intervention are the characteristics of a market economy.

Detailed explanation-5: -The market establishes the prices for goods and other services. These rates are determined by supply and demand. Supply is created by the sellers, while demand is generated by buyers. Markets try to find some balance in price when supply and demand are themselves in balance.