Final answer:
A free enterprise economy or market economy is based on private ownership of goods and private decisions to invest in trade or business industries with the intent of making a profit. Private individuals or groups own and operate businesses, supplying goods and services based on demand. Market forces, not government, determine economic decisions.
Step-by-step explanation:
The economic system based on private ownership of goods and private decisions to invest in trade or business industries, with the intent of making a profit, is called a free enterprise economy, or market economy. In this type of economy, decision making is decentralized, and private individuals or groups own and operate businesses, providing goods and services based on demand. Market forces, not governments, determine decisions regarding what and how much to produce, how to produce it, and for whom to produce.
In contrast, a command economy is one in which the government owns the resources, and the supply of goods and services depends on government decisions. In free enterprise economies, an individual's income is based on their ability to turn resources, especially labor, into something society values. The higher society values the person's output, the higher their income, based on market demands and not governmental decrees.
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