what are the three market forces in a free-enterprise economy
Free market
In a free market , individuals and firms taking part in these transactions have the liberty to enter , leave and participate in the market as they so choose . Prices and quantities are allowed to adjust according to economic conditions in order to reach equilibrium and properly allocate resources . However , in many countries around the world , governments seek to intervene in the free market in order to achieve certain social or political agendas . Governments may attempt to create social equality or equality of outcome by intervening in the market through actions such as imposing a minimum wage ( price floor ) or erecting price controls ( price ceiling ) . Other lesser - known goals are also pursued , such as in the United States , where the federal government subsidizes owners of fertile land to not grow crops in order to prevent the supply curve from further shifting to the right and decreasing the equilibrium price . This is done under the justification of maintaining farmers ' profits ; due to the relative inelasticity of demand for crops , increased supply would lower the price but not significantly increase quantity demanded , thus placing pressure on farmers to exit the market . Such interventions are often done in the name of maintaining basic assumptions of free markets , such as the idea that the costs of production must be included in the price of goods . Pollution and depletion costs are sometimes NOT included in the cost of production ( a manufacturer that withdraws water at one location then discharges it polluted downstream , avoiding the cost of treating the water ) , so governments may opt to impose regulations in an attempt to try to internalize all of the cost of production ( and ultimately include them in the price of the goods ) .
In a free market , individuals and firms taking part in these transactions have the liberty to enter , leave and participate in the market as they so choose . Prices and quantities are allowed to adjust according to economic conditions in order to reach equilibrium and properly allocate resources . However , in many countries around the world , governments seek to intervene in the free market in order to achieve certain social or political agendas . Governments may attempt to create social equality or equality of outcome by intervening in the market through actions such as imposing a minimum wage ( price floor ) or erecting price controls ( price ceiling ) . Other lesser - known goals are also pursued , such as in the United States , where the federal government subsidizes owners of fertile land to not grow crops in order to prevent the supply curve from further shifting to the right and decreasing the equilibrium price . This is done under the justification of maintaining farmers ' profits ; due to the relative inelasticity of demand for crops , increased supply would lower the price but not significantly increase quantity demanded , thus placing pressure on farmers to exit the market . Such interventions are often done in the name of maintaining basic assumptions of free markets , such as the idea that the costs of production must be included in the price of goods . Pollution and depletion costs are sometimes NOT included in the cost of production ( a manufacturer that withdraws water at one location then discharges it polluted downstream , avoiding the cost of treating the water ) , so governments may opt to impose regulations in an attempt to try to internalize all of the cost of production ( and ultimately include them in the price of the goods ) .