Q. Consider the following statements about “Free Market”::
1. It is a system in which there is a free provision of products.
2. In free market, forces of supply and demand are free from any intervention by a government.
Which of the statements given above is/are correct?
Free market
In economics, a free market is an idealized system in which the prices for goods and services are determined by the open market and by consumers.
In a free market, the laws and forces of supply and demand are free from any intervention by a government, by a price-setting monopoly, or by other authority.
Proponents of the concept of free-market contrast it with a regulated market, in which a government intervenes in supply and demand through various methods — such as tariffs — used to restrict trade and to protect the local economy.
In an idealized free-market economy, prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy.
Although free markets are commonly associated with capitalism within a market economy in contemporary usage and popular culture, free markets have also been advocated by free-market anarchists, market socialists, and some proponents of cooperatives and advocates of profit sharing.
Source: NCERT
