Question

What is a free market? Is what ways does a free market economy differ from a centrally planned economy?

The answer to each discussion board must be at least 250 words – that is the minimum required to fully answer the questions. Each answer must demonstrate critical thinking and writing at a college level.

Answer 1

A free market is controlled by the market forces of supply and demand, in a free market, a majority of companies and properties are owned by individuals in the private sector instead y the government. A free market promotes the production and sale of goods and services, with little to no control or involvement from any central government agency. The lack of government control allows free market economies a wide range of freedoms.
Characteristics of a Free Market

• 1. Private ownership of resources
• 2. Existence of large number of Bank & Financial institution
• 3. Freedom to Enter

Benefits of a Free Market

• 1. Innovations
• 2. Customer oriented strategies
• 3. Absence of Red Tape
• .

Drawbacks of a Free Market

• 1. Profit as main motives
• 2. Market failures

Difference between planned Market and Free Market

• A "planned" economy is one in which the state, or government, makes the basic economic decisions.   A free market/economy is one where market forces of supply and demand decide about price.
• Government has control over market .No interference of government, market forces decide
• Majority of firms are owned by government .Majority of the firms are in private sector and owned by people.
• In a planned economy, transactions between individuals, or individuals and businesses are regulated by price controls, rationing, or other means.In a free market the transaction are don’t by people and these are influenced by market forces
• The production decisions about different commodities are taken by government.Market forces or owners of the firm decide what they want to produce and in what quantity.
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