Written by the Fiveable Content Team • Last updated September 2025
Written by the Fiveable Content Team • Last updated September 2025
Definition
A free-market is an economic system where prices for goods and services are determined by the open market and consumers, without intervention by governments. In this system, the forces of supply and demand are free from any external control.
An economic system characterized by private or corporate ownership of capital goods, investments that are determined by private decision, and prices, production, and the distribution of goods that are determined mainly by competition in a free market.
The economic model that determines the price of anything in a market, stating that the price of a good will vary until it settles at a point where the quantity demanded will equal the quantity supplied.
Market Economy: An economy in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system