Describe the features of the Free-market system

Property rights are social institutions that govern the ownership, use and disposal of resources, goods and services.

Allied to the property rights is freedom of enterprise which is another basic feature of a market economy. Freedom of enterprise means that everybody is free to engage in whatever economic activity he pleases. In other words, he is free to choose to work in any industry he likes or adopts any occupation or trade he desires.

No individuals would work and save if adequate incentives are not provided to them in the form of wages and interest respectively. Similarly, the firms will not produce goods and services and bear risk of losing money if sufficient incentives are not given to them. Profits are earned from undertak­ing the task of producing goods and services and introducing new products and new techniques of production. Profits earned by the firm depend on prices of goods and services produced and cost incurred.

In ordinary speech the word market means a place where buyers and sellers meet to buy and sell goods. In economics, market has a wider meaning and is interpreted to mean any arrangement that enables buyers and sellers to exchange things; they may contact each other through telephone, fax or direct computer link to negotiate prices of goods they buy and sell. In our above example, rational and self-interested consumers and profit-maximizing firms contact each other through any media and buy and sell things on the negotiated price.