Question

What are 3 characteristics of a market economy?.

Answer 1

In a market economy, supply and demand, as opposed to government intervention, control the economy.

What is  market economy ?

• A market economy is one in which there are no price controls or restrictions on the freedom of contracts, and all suppliers and consumers are free to set their own prices.
• In a market economy, decisions about investment, production, and distribution to consumers are driven by the price signals produced by the forces of supply and demand.
• Existence of factor markets that dominate the distribution of capital and production inputs is the primary attribute of a market economy.
• Market economies can range from minimally regulated free-market and laissez-faire systems, where state activity is limited to providing public goods and services and safeguarding private ownership, to interventionist forms, where the government actively participates in advancing social welfare and special interests.
• The areas of the economy where the state can intervene are those where goods are produced, distributed, traded, and consumed.
• A public health care policy that is egalitarian in nature could completely control how basic necessities like health care are distributed (while leaving private industry in charge of the production), thereby completely eliminating the influence of supply and demand.

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