ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A capitalist free-market economy is an economic system where prices for goods and services are set freely by the forces of supply and demand and are expected by its supporters to reach their point of equilibrium without intervention by government policy.

Detailed explanation-2: -A market is not a place; rather, it is the voluntary exchange of goods and services. Market: freely chosen activity between buyers and sellers of goods and services.

Detailed explanation-3: -A market is a place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services. Markets can be physical like a retail outlet, or virtual like an e-retailer. Other examples include illegal markets, auction markets, and financial markets.

Detailed explanation-4: -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-5: -A free market economy is one where supply and demand regulate production and labor as opposed to government intervention. Most countries’ economies contain elements of both free market and command economies.