Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 2 - The Market System and the Circular Flow - Discussion Questions - Page 49: 6

Answer

The answer is below.

Work Step by Step

a) A market system is one in which business owners control their own wealth, meaning that they risk losing money in order to gain money. b) Competition is necessary in this system because, by creating competition, businesses are forced to compete with each other to give the lowest price and/or offer the best product.
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