Market economy: Market economy is defined as the economic activity which is unplanned and free and in this type of economic activity, competitions from free enterprise makes all the economic decisions and prices are determined by law of supply and demand.
Example of country:
Honk Kong
Characteristics:
Private property
Freedom of choice
Motive of self Interest
Competition
Systems of market and prices
Limited but active government
From 1947 Hong Kong had free market and people there had full liberty to own property and had freedom of choice and number of industrial development rose from 9301 and by this system there employees were also encouraged and number of employees rise from 51,627 to 431,973. And Hong Kong’s also succeeded in various developments like they moved on to more sophisticated variety of goods and more production of goods. And they were also able to export heavy industrial goods due to this type of economy. They made all the developments without following five or ten years plan. Indeed they set an example of such rapid development.
Advantages:
Most desired goods and services were produced
Most desired goods and services were produced because consumers were willing to pay the highest prices demanded for the goods they wanted and in the business only those things were produced which generated more profit.
Production of goods in the most efficient manner
The production of goods was carried out in the most efficient manner. For