Question

The lesson you learned that a market economy is where the prices of services and goods are determined through a free system.

Based on what you learned, describe two advantages and two disadvantages of this type of economy.

Answer 1

There are a few disadvantages of a free market economy.

Step-by-step explanation:

A free market economy allows individuals to innovate. They have freedom to create new ideas and new products or services for profit. They do not have to follow the government for doing so. This leads to economic growth and expansion of businesses.

The disadvantage created through this system is that this leads to poor working conditions for employees in the companies. Products that are not profitable would not be produced.

For earning huge profits, the quality of the product might be deteriorated. Companies may take unethical decisions just to earn more profits. There would be unhealthy competition.