free-market economics
Definition
Free-market economics refers to an economic system where prices for goods and services are determined purely by supply and demand without any interference from government regulations or interventions.
Analogy
Imagine you're at a school fair with various vendors selling snacks. The prices for each snack are not set by anyone but rather depend on how much people want them. If a popular snack runs out quickly, its price may rise. Free-market economics works similarly - prices adjust freely based on consumer demand.
Related terms
Supply and Demand: The relationship between the quantity of a product that producers are willing to sell at various price levels (supply), and the quantity that consumers are willing to buy at those price levels (demand).
Competition: Rivalry among sellers to attract customers, which helps drive prices down and improves the quality of goods and services.
Market Forces: The economic factors that influence supply and demand, such as consumer preferences, production costs, and competition.
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