19What is a free enterprise system based on?

The question of what to produce may be based on what trend is popular right now. The question of how to produce is usually based on the producer's choice. The question involving for whom to produce is based on the consumers who decide what they want or need and what price they are willing to pay for it.

20/Who owns the means of production in a society with a market economy?

There are several essential elements in a market economy. One of them is private property – the right of individuals and businesses to own the means of production. Unlike command economy with its public property, in a free market economy the major factors of production are privately owned. Private ownership gives people the incentive to use their property to produce things they will sell and make profits.

21/How are the basic questions decided in a market economy?

In a market economy the fundamental economic questions are answered in the marketplace by the interaction of buyers and sellers. The question of what to produce may be based on what trend is popular right now. The question of how to produce is usually based on the producer's choice. The question involving for whom to produce is based on the consumers who decide what they want or need and what price they are willing to pay for it.

22.What role do buyers and sellers play in a market economy?

The market economy (or free enterprise economy) is an economic system in which the decisions of many individual buyers and sellers interact to determine the answers to the questions of What, How and Who

23.What is private property?

There are several essential elements in a market economy. One of them is private property – the right of individuals and businesses to own the means of production.

24.What is the profit motive?

Unlike command economy with its public property, in a free market economy the major factors of production are privately owned. Private ownership gives people the incentive to use their property to produce things they will sell and make profits.

This desire to earn profits or the profit motive is a second ingredient in a market economy. The profit motive encourages sellers to produce commodities at the lowest possible cost.

25.What is the main incentive of a free enterprise, or market, economy?

Private ownership gives people the incentive to use their property to produce things they will sell and make profits.

26.How do the individuals benefit from a market economy?

private property – the right of individuals and businesses to own the means of production.

27.What is a mixed economy?

The mixed economy is an economic system that answers the three economic questions both in the marketplace and in the government*.

28Why are there neither pure market economies nor pure command economies?

A mixed economy contains both privately and publicly owned enterprises and relies on the market but with a large share of government intervention.

29.Why are economic systems of most democratic countries called mixed economies?

Since no country in the world has either type of economic system in its pure form, all major economies are mixed ones because market forces as well as government decisions* play a role in answering the basic economic questions.

An Initial Look at Demand What do We Mean by Demand? The Law of Demand Elasticity of Demand