How does a free market economy encourage business to thrive?

Answer by  tamarawilhite (17883)

Free market economies allow business owners to keep their profits, encouraging growth. Socialized economies restrict new businesses and support government-favored companies, limiting growth of non-connected firms. Socialism also favors government owned businesses at the expense of the free market.

Answer by  mingxhin (188)

A free market will promote competition between businesses and individuals to innovate their products in order to survive. This stress will lead to greater improvements in products and services offered. Plus there is an incentive to win because the winner will get the appropriate value for his work unlike in a state economy where there is no such incentives.

Answer by  HelpChat (494)

Free market economies allow people with needs to be matched with other people who have solutions with those needs. Creators of new products or new methods are rewarded with profit. Over time, competitors help reduce the cost of new goods, which leads businessmen to seek new ventures. Profit which is not needed immediately is lent to other inventors.