economy refers to the economy in which decisions regarding
investment, production and distribution are based on supply and demand hence
the prices of goods and services are determined in a free price system.
Mexico and United States of America
sends signals and provides incentives to buyers and sellers. When supply and
demand changes, the market prices adjust hence affecting incentives.
Competition among the sellers leads in lower costs and prices hence there is
frequent fluctuation of prices. In market economy, price signals ensure that a
customer wants are satisfied.
play a role in increasing the level of human capital and making real investments
that create technological processes to
use in the economy. Stable and strong demand will create a stable market for
the goods and hence it plays a role in boosting productivity.
law of supply demonstrates the quantities that will be sold at a certain price
while law of demand states that if all factors remain equal, the higher the
price of a good, the less the demand.
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