Free Market Economic System
A free market system is one that is determined by the choices of the producer and consumer who are the citizens of an economy, not the government. In this economy, the consumer choice dictates the production of goods and services, which is called consumer sovereignty. Business leaders, or entrepreneurs, choose the factors of production. Their goal is for the most efficient and most profitable method of production. Also, the consumers' income determines who receives which goods and services. The advantages of this system is that the citizens of these economies have the freedom to choose what they wish. Prices are determined by market forces which are the goods and services of an economy. As most of the economies businesses are private enterprise, the profit they make, they can keep. Also, innovation is encouraged in these economies as new ideas are always wanted to make life better. However, there is an increasing in the wastage of resources as they aren't used to their fullest potential. There is much inequality in this system, as the rich get richer and the poor get poorer. Sometimes in this system, there is a market failure which causes all of the private enterprise to fall, causing the economy into chaos. Also, there is a large amount of unemployment in this system, so there is a wastage of resources as there could be opportunities for employment and labour could be at its fullest potential. Germany, The United States, India, Australia, Hong Kong and Japan are considered excellent examples of a free market economy.
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