Free Market Economy I A Level and IB Economics
In this short topic video we look at the key features, advantages and potential drawbacks of a free market economic system.
OVERVIEW
In a free market economy, markets allocate resources through the price mechanism. An increase in demand raises price and encourages businesses to use more resources into the production of that good or service. The quantity of products consumed by people depends on their income and income itself depends on the market value of an individual's work. In a free market economy there is a limited role for the government, indeed in a pure free market system, the government limits itself to protecting property rights of people and businesses using the legal system and protecting the value of money or the value of a currency.
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