Free Market
Definition
A free market is an economic system where prices are determined by unrestricted competition between privately owned businesses.
Analogy
Think of a free market like a school fair. Each stall (business) sets its own prices and competes with others to attract customers. The most successful stalls are those that offer the best value for money, just like in a real-world free market.
Related terms
Capitalism: An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
Supply and Demand: Economic model of price determination in a market. It postulates that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded equals the quantity supplied.
Competition: The activity or condition of striving to gain or win something by defeating or establishing superiority over others.
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