ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a free market economy, the products are produced according to the satisfaction of consumers. Therefore, resources for production are allocated after doing a thorough analysis on consumer satisfaction which is regarded as the top most priority without comprising the goal of profit maximization.

Detailed explanation-2: -Goods and services are distributed in a free market based on prices. A price is a request by a producer for a dollar amount in exchange for a good or service and it is met by consumers if they decide to buy from that supplier or to go with a competitor.

Detailed explanation-3: -A free market is one where voluntary exchange and the laws of supply and demand provide the sole basis for the economic system, without government intervention.

Detailed explanation-4: -Market prices are dependent upon the interaction of demand and supply. An equilibrium price is a balance of demand and supply factors. There is a tendency for prices to return to this equilibrium unless some characteristics of demand or supply change.

Detailed explanation-5: -Free markets are a mechanism for distributing and allocating goods that have been produced by way of price discovery. This involves buyers and sellers competing with one another and among each other to agree upon a price that, in theory, reaches an equilibrium based on supply and demand.