MARKET ECONOMY

FEATURES OF THE FREE ENTERPRISE SYSTEM:

Owning private property is a basic freedom in the free enterprise system.

People and businesses are free to enter into a voluntary exchange agreement.

PROFIT

Sellers are free to make as much profit as they can.

People are free to focus first on their own self-interest.

People are free to “vote with their dollars”. People are free to start a business and or choose their career.

Little government interference.

COMPETITION

• Sellers can use any method (legally) in order to get consumers to buy their products

SPECIALIZATION• Buyers and sellers are able to concentrate

their efforts in areas where they have an advantage.

Impact of Market EconomiesADVANTAGES DISADVANTAGES

Economic Freedom – jobs, purchases

Unequal distribution of wealth

Political Freedom Unequal opportunities

Quicker response to changeProfit

Two major trends in modern economies:1. Many economies moving away from Command Systems and privatizing business.

2. Globalization by getting foreign investors.