market
Explanation:
An economy is a function of how money, means of production and resources (raw materials) are carefully used to facilitate the demands and supply of goods and services to meet the unending needs or requirements of the consumers.
Hence, a region's or country's economy is largely dependent on how resources are being allocated and utilized, how many goods and services are to be produced, what should be produced, for whom they are to be produced for and how much money are to be spent by the consumers to acquire these goods and services.
Basically, there are four (4) main types of economy and these are;
I. Mixed economy.
II. Free market economy.
III. Traditional economy.
IV. Command economy.
A market economic system also referred to as capitalism or free-enterprise can be defined as a type of economy in which prices, products and services are being determined by the market rather than the government. Thus, a market economic system is devoid (free) of government regulations, interference or control because the market (enterprises) are the ones who are saddled with the responsibility of determining the market forces.
Simply stated, a market economic system is a type of economy that is completely driven by demand and supply of goods and services.
The four (4) main elements or characteristics of a market economic system include the following;
a. Profit: businesses are all out to generate revenue and profit through the sales of finished goods.
b. Economic freedom: means of production of goods and services are controlled by the people rather than the government. Thus, the producers are free to make their economic choices or decisions such as deciding on how much is to be charged on a product.
c. Private ownership of properties: the various factors of production are owned and allocated by the people. Thus, citizens have rights to the ownership and use of private property.
d. Competition: there are many buyers and sellers of homogeneous products, as well as free entry and exit in the market. Thus, consumers are free to make their economic choices or decisions such as deciding on which product to buy, which goods interest them, where to shop for goods, etc.
A market type of economic system belongs in the box above.
