(2) The market provides an incentive to acquire useful skills. The free trade agreements in North America helped the U.S. economy grow by an average of 0.5% per year more than it would have otherwise. The principle of market economy dictates that producers and sellers of goods and services will offer the highest possible price that consumers are willing to pay for goods or services. The advantages of a market economy can be summarized as: Buyers are free to purchase any commodity which they like and in whatever amounts. Advantages of a free market Producers have full control of what to produce, and they will be more motivated to work and produce the goods toearn money. First, it allows for individuals to innovate. Consumers are willing to pay the highest price for the things they want the most. The decisions are taken as under: 1. A market economy is an economy where most resources are owned and controlled by individuals and are allocated through voluntary market transactions governed by the interaction of supply and demand. dcb Miami FL Advantages: (1) The market gives producers an incentive to produce goods that consumers want. A market economy system is where all decisions regarding the production, distribution, investment, consumption, competition, prices policy are created by the forces of the market, such as individuals or organization seeking their benefit. The seller of a good or its producer can also produce whichever product they want to and also increase the capacity of any individual commodity depending upon the forces of the market. It also encourages economy growth by allowing total control to the producers, who will produce goods according to what the markets demand. This system encourages economic freedom and was set up so that it would regulate itself due to money flowing where the demand is greatest and encouraging competition and initiative. What are the advantages a market economy offers producers? Businesses will only create those things that return a profit. When countries can freely move products across borders, then each nation gets to take advantage of the manufacturing, commercial, and industrial strengths of every other economy in the agreement. 2. Marketing Widens the Market: Marketing draws out the hidden wants of consumers, creates new demand, locates the untapped areas and finds out the possibilities of selling new products. HOW TO PRODUCE? Market economies can be defined as a market-oriented economic system. ADVERTISEMENTS: The importance of marketing can be further highlighted from its various benefits listed below: 1. It means that produces are free to decide 'what, how and for whom to produce '. Since a market economy allows the free interplay of supply and demand, it ensures that the most desired goods and services are produced. Advantages of a Market Economy. Individuals have the freedom to create new ideas, new products, and new services to sell for profit. When the level of supply meets the level of demand, a natural economic equilibrium is achieved. In a market economy everything is controlled by the market forces or the forces called demand and supply.The price of goods and services are determined by the level of demand and supply.The government needs to play a role in such an economy because the market economy can sometimes face problems of recession and depression and in such a situation the government must ⦠The producer will produce those goods which offer them high profits. Market Economy. Add your answer and earn points. A free market economy has two key advantages. 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