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: -A market economy is a system where private individuals and businesses operate the economy on the basis of demand and supply without much state intervention. It increases economic efficiency and provides more independence to both businesses and customers, in turn promoting economic growth.

Detailed explanation-3: -The activity in a market economy is unplanned. It is not organized by any central authority but is instead determined by the supply and demand of goods and services. The United States, England, and Japan are all examples of market economies.

Detailed explanation-4: -Characteristics of a Free Market Free economies exist because a significant portion of resources are owned by individuals or companies in the private sector and not a central government agency. In this way, the owners exercise total control over the means of production, allocation, and exchange of products.

Detailed explanation-5: -A centrally planned economy is the one in which economic activities (production, consumption and exchange) are governed by the government. Market economy is the one in which economic activities (production, consumption and exchange) are governed by the market forces of supply and demand.