Question

Brian has just finished college. He wants to set up a small business to make and sell fireworks. He registers his company and acquires a license from the government. He finds that most of his competitors are selling fireworks at an extremely low price. He would like to make more money, so he decides to innovate and develop better fireworks. He sells his fireworks at a higher price, and they are a huge hit with the customers. After a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government’s health and safety regulations. He even starts exporting fireworks overseas. Which type of economy does this scenario describe?

mixed economy
command economy
communist economy
traditional economy
market economy

Answer 1

it would have to be market economy

Answer 2

The answer to this question is Market Economy.The most dominant Characteristic of the Market Economy is the freedom for the private sectors to compete and took control of the market.In order to beat the competitors, various strategies such as lower price, mass production, improving customer service, inventing a product that makes customer's life easier are often used by the companies that mentioned in the scenario.In market economy, the Government only played as a regulator to make sure that the each competitors follow a certain regulations to protect consumers.