Free Market Principles
Definition
These principles refer to an economic system where prices for goods and services are self-regulated by buyers' demand and sellers' supply. The government does not intervene in pricing decisions or business operations.
Analogy
Imagine a farmer's market where vendors set their own prices based on what customers are willing to pay. That's like free market principles at work - no outside force is controlling how much things cost; it's all up to supply (the vendors) and demand (the customers).
Related terms
Supply & Demand: Economic model that determines price levels in a market depending on availability (supply) versus desire for purchase (demand).
Competition: The rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix.
Consumer Sovereignty: A characteristic of a market economy that gives ultimate power over what is produced to consumers.
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