How a Market Economy Work? Advantages of a Market Economy

The Top 25 Most Economically Free Countries in the World (2021):

1. 
   Taiwan (Republic of China) — 9.02
   
2. 
   Hong Kong (China SAR) — 8.91
   
3. 
   Singapore — 8.81
   
4. 
   New Zealand — 8.56
   
5. 
   Switzerland — 8.48
   
6. 
   Georgia — 8.26
   
7. 
   United States — 8.24
   
8. 
   Ireland — 8.21
   
9. 
   Lithuania — 8.21
   
10. 
    Australia — 8.20
    
11. 
    Denmark — 8.17
    
12. 
    Mauritius — 8.16
    
13. 
    United Kingdom — 8.15
    
14. 
    Estonia — 8.11
    
15. 
    Canada — 8.06
    
16. 
    Malta — 8.03
    
17. 
    Armenia — 8.03
    
18. 
    Japan — 7.98
    
19. 
    Latvia — 7.94
    
20. 
    Finland — 7.92
    
21. 
    Germany — 7.91
    
22. 
    Iceland — 7.90
    
23. 
    Spain — 7.89
    
24. 
    Cyprus — 7.89
    
25. 
    Romania — 7.88
    
26. 
    Czech Republic — 7.87
    

Cuba, China, and North Korea are examples of mixed economies that hew closer to a command economy than a free market economy.

Market Economy - Key takeaways

• 
  A free market economy and market economy are used interchangeably.
  
• 
  Private property, freedom, self-interest, competition, minimum government intervention are the characteristics of a market economy.
  
• 
  A market economy is governed by supply and demand.
  
• 
  The most important advantages of a market economy include efficient allocation of resources, competition driving innovation, consumer sovereignty, and flexibility to adapt to changing market conditions.
  
• 
  Disadvantages of a market economy include inequality, negative externalities, limited government intervention, uncertainty and instability, and lack of public goods.
  
• 
  The distribution of available resources for diverse purposes is referred to as