Which term best describes a market economy with private ownership and limited government intervention?

• A. Free Enterprise Economy
• B. Command Economy
• C. Mixed Economy
• D. Traditional Economy

Answer: (A)

Understanding economic systems: when resources are owned privately and the government steps in mainly to enforce laws and protect property rights, decisions about production and prices come from the market—supply and demand—rather than a central plan. That setup describes a free enterprise economy, where private ownership, voluntary exchange, and limited government intervention drive the economy. Conversely, a command economy relies on central planning by the government with little private ownership; a mixed economy adds more government involvement than the scenario describes; a traditional economy bases decisions on customs and routines rather than market signals. So the term that best describes a market economy with private ownership and limited government intervention is free enterprise economy.