Final answer:
Decentralization of power is important in a free market economy because it allows for competition, innovation, and consumer choice.
Step-by-step explanation:
In a market economy, decentralization of power is an important part of capitalism because it allows for competition and innovation. In a free market, power is distributed among private individuals or groups of individuals who own and operate businesses based on their own decisions.
This decentralization of power allows for a variety of businesses to exist, offering different goods and services to meet the diverse demands of consumers. Competition among these businesses drives efficiency, lowers prices, and encourages innovation.
For example, in a decentralized market, if one business fails to meet consumer needs or provide quality products, consumers have the freedom to choose from other competitors. This pressure encourages businesses to continuously improve and adapt to the changing demands of the market.