Final answer:
A free market economy is an economic system in which prices are determined by the interactions of buyers and sellers. It is a capitalist economy that prioritizes private ownership and individual decision-making.
Step-by-step explanation:
A free market economy is an economic system in which prices of products are determined by the interactions of buyers and sellers. It is a capitalist economy, not a socialist economy, as it prioritizes private ownership and individual decision-making. In a free market economy, buyers and sellers have the freedom to engage in voluntary transactions and set prices based on supply and demand.
For example, in a free market economy, if there is high demand for a particular product, the price will increase. If the demand decreases, the price will likely decrease as well. The determination of prices in a free market economy allows for competition and incentives for innovation and efficiency.
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