What Is A Market Economy?


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Nouman Umar answered
A market economy is one which is completely under the supervision of private sector. Its mean that all activities are according the wishes of private companies there is no influence of the government on the economy. In market economy the production of goods is measured by the supply and demand in the country. The prices are not determined by any person if any thing which has higher demand the price will go up and if the demand is low and supply is in excess the price will fall. Companies produce goods and services according to the customer demand and their consumption behavior.

The government has no restrictions on the demand and supply of goods and services. The government does not put restriction on the producer to import goods from the foreign countries so that the consumers can get benefits of the high quality products. The government does not interfere in setting any price of the goods or service. However the government can control the monopoly in the market because it is not in the interest of the consumers. Government provides the facilities to the local businesses to grow more and they can face foreign competition. In this way the market economy works.

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