Discuss the effects of private ownership of production in a market economy.
What will be an ideal response?
Answer: In a pure market economy all productive activities are privately owned instead of being owned by the state. This works by supply and demand, if the demand is higher than supplies prices rise and if the supply is higher than the demand prices fall. Supply restriction cannot occur for this market to work, there cannot be any monopolies, monopolies can strict the supply, making demand rise therefore raising the prices because there is no competition. Private ownership encourages vigorous competition and economic efficiency and encourages entrepreneurship which has the most positive impact on economic growth and development.
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