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Economics (definitions): Define a free market. Focus on how prices and resource allocation are determined and the role of government. Choose the most accurate definition.

Difficulty: Easy

Correct Answer: An economy where prices are set by supply and demand with minimal government intervention

Explanation:


Given data

  • Term: Free market.


Concept/Approach
A free market is characterized by voluntary exchange, private property, competition, and price signals emerging from supply and demand with limited regulatory controls.


Reasoning
• Option (a) correctly captures price formation and the limited role of the state. • Options (b), (c), (d) contradict core features of a free market.


Final Answer
An economy where prices are set by supply and demand with minimal government intervention

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