ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a market economy, prices are set by the decisions of thousands of consumers and producers, each acting in their own self-interest.

Detailed explanation-2: -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-3: -A centrally planned economy, also known as a command economy, is an economic system where a government body makes economic decisions regarding the production and distribution of goods.

Detailed explanation-4: -An economy that depends only on the market forces of demand and supply is called a capitalist economy.

Detailed explanation-5: -In a free-market (capitalist) economy, individuals own the factors of production: Businesses produce products. Consumers choose the products they prefer causing the companies that product them to make more profit.