GENERAL KNOWLEDGE

Detailed explanation-1: -In capitalist economy, prices of the commodities are affected by market forces of demand and supply which leads to open competition in the economy for both buyers, who compete to satisfy their wants as well as sellers, who compete to sell their goods and earn profits.

Detailed explanation-2: -Which of the following is true in a capitalist economy? Prices serve as incentives for factors of production to move to the markets where they are most valued.

Detailed explanation-3: -In economics In microeconomics, freedom of choice is the freedom of economic agents to allocate their resources as they see fit, among the options (such as goods, services, or assets) that are available to them. It includes the freedom to engage in employment available to them.

Detailed explanation-4: -Role of Price Mechanism in Mixed Economy Here price mechanism will pay an equal role along with the planning authority. Especially in the private sector of such an economy, the price mechanism along with the competing forces helps the economy with an allocation of resources and other such efficient decisions.