Basic Characteristics of a Market Economy

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Presentation transcript:

Basic Characteristics of a Market Economy Private property- individuals and private businesses own most land and capital goods Free enterprise- with some limitations, individuals and firms are free to act however they wish in the economy

Basic Characteristics of a Market Economy Self interest- the “invisible hand” that guides people to unconsciously do what is best for society Competition- keeps prices in line with costs of production

Basic Characteristics of a Market Economy System of Markets and Prices- Markets bring together buyers and sellers. The forces of supply and demand determine prices. Limited government- At a minimum, government is needed to define and enforce property rights, and provide some goods and services that are not provided efficiently by the markets

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