Final answer:
A free enterprise market economy where businesses decide independently on their production and sales is known as capitalism. It features minimal government intervention, economic freedom, and a price system based on supply and demand, promoting competition.
Step-by-step explanation:
A free enterprise market economy is called capitalism. In this type of economy, businesses are free to determine what goods to produce, and they have the autonomy to decide who to sell them to. Private individuals or groups own and operate the means of production and make their decisions based on self-interest. The government has limited interference, and economic freedom allows consumers to choose what to purchase and where to work.
In a well-functioning market economy, the price system is entirely determined by the forces of supply and demand, without government intervention. This promotes competition among buyers and sellers. Buyers seek to purchase goods at the lowest prices, while sellers compete for sales through lower prices or offering higher quality. Unlike command economies, which have centralized decision-making, market economies boast a decentralized structure, allowing for more flexibility and responsiveness to consumer demands.