List two positive and two negative characteristics of market economies.

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mkoren eNotes educator| Certified Educator

There are positives and negatives to the free market system.  One positive characteristic of the free market system is that it determines the ideal price of items. When supply and demand are matched equally, this is the best use of resources and the point where profit is maximized. Another positive characteristic is this system encourages innovation and risk-taking.  For people willing to take risks, the rewards can be great. People are free to make their own choices and decisions. 

There are some disadvantages also. In a free market system, there would be no government regulations.  Therefore, people could get exploited.  Before government regulations existed, there were no health and safety laws in factories or consumer protection laws for the public. Another disadvantage is that for some items where no competition can exist (for example with utilities), consumers could be charged some really high prices.

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