Question

Brian has just finished college. He wants to set up a small business to make and sell fireworks. He registers his company and acquires a license from the government. He finds that most of his competitors are selling fireworks at an extremely low price. He would like to make more money, so he decides to innovate and develop better fireworks. He sells his fireworks at a higher price, and they are a huge hit with the customers. After a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government's health and safety regulations. He even starts exporting fireworks overseas. Which type of economy does this scenario describe?

Answer 1

The answer is: Market economy

In the market economy, the citizens and the private sector has the majority of the control in the economy. Even though government exist in this type of economy, its role is limit to making a couple of regulations to ensure that the private sector are competing fairly.

Market economy is driven by the power of supply and demand. This is why Brian tried to innovate his products and export their power overseas. All of these are the efforts to market his products so more consumers became interested in purchasing it.