write a brief note on market economy ?? 4 marks
Answers
Brief note on market economy
A market economy exists where the resources in an economy are owned by private individuals and businesses. In a market economy, goods and services are voluntarily traded in the marketplace, where prices are set by supply and demand. Government involvement in a 'pure' market economy is pretty much non-existent.
Explanation:
A market economy is an economy where most resources are owned and controlled by individuals and are allocated through voluntary market transactions governed by the interaction of supply and demand.
People exchange resources, such as money, for other resources, such as goods or services, on a voluntary basis in the market. The value of the resources exchanged is based upon how scarce each resource is and how many people want the resource. If the supply of a resource is low, but the demand is high, the price will tend to be high. If the demand is low and the supply high, the price will tend to be low.
Economic growth and development in a market economy is determined by the relative risks and rewards (or profits) that particular economic activity presents to individuals. If risks are too high and rewards are too low, then certain activities probably will not be pursued.
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