Answer:
What Is a Free Market Economy?
Government highly control some economies. In planned economies, or command economies, the government controls the means of production and the distribution of wealth, dictating the prices of goods and services and the wages workers receive. In a free market economy, the law of supply and demand, rather than a central government, regulates production and labor. Companies sell goods and services at the highest price consumers are willing to pay while workers earn the highest wages companies are willing to pay for their services. A purely capitalist economy is a free market economy; the profit motive drives all commerce and forces businesses to operate as efficiently as possible to avoid losing market share to competitors.
KEY TAKEAWAYS:
A free market economy is one where supply and demand regulate production and labor as opposed to the government.Most countries' economies contain elements of both free market and command economies.Hong Kong's economy is considered the most free, followed by New Zealand while Algeria and Timor-Leste were the least free in 2019, according to the 2019 Index of Economic Freedom.
