A market economy has several aspects that characterize it. It is very rare that all of these aspects are realized completely.
1) In this type of economy the government doesn't intervene.
2) Resources are privately owned. Goods and services are given by the individuals.
3) There has to be freedom of choice to buy and sell whatever the people want. Freedom of enterprise to start any business you want.
4) Every entrepreneur sees for himself and looks to maximize their profit. They act on self interest.
5) Competition is very important for a market economy to work. <u>In theory</u>, when there's competition the market will regulate itself preventing price and power abuses and guaranteeing the best price for the costumer.
A market economy has a few viewpoints that describe it. It is exceptionally uncommon that these viewpoints are acknowledged totally.
Explanation:
The focuses are:
1) In this kind of economy the legislature doesn't mediate.
2) Resources are exclusive. Merchandise and enterprises are given by the people.
3) There must be opportunity of decision to purchase and offer whatever the general population need. Opportunity of big business to begin any business you need.
4) Every business visionary sees with his own eyes and hopes to expand their benefit. They follow up on self intrigue.
5) Competition is critical for a market economy to work. In principle, when there's opposition the market will manage itself anticipating cost and power mishandles and ensuring the best cost for the costumer.
A traditional economy is a society where economic decisions are guided by customs. It relies on hunting and fishing, and uses a barter system for trade.
