1.3 Opportunity cost
1 The basic economic problem
1.3 Opportunity cost
<<< 1.2 The factors of production
Reference: Cambridge IGCSE and O Level Economics Second Edition
2.9 The (Free) Market System
The (Free) Market System A market economy is an economy that has no government intervention in the allocation of resources & distribution of goods/services This is also called a free market economy There is no purely free market economy in the world but some countries have less government intervention than others An economy can be considered to be a market, mixed or planned economy The type of economy is determined by how the three economic questions are answered The three basic economic questions are what to produce, how to produce it, and for whom. In a market economy, these decisions are made by businesses and consumers rather than the government This ultimately determines the amount of government intervention in an economy Source: Heritage Foundation How resources are allocated in a market system? • private sector • consumer sovereignty plays a key r...
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