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  3. (46)Free-market economy is an economic system in which individuals, rather than government, make the majority of decisions regar

(46)Free-market economy is an economic system in which individuals, rather than government, make the majority of decisions regar

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问题     (46)Free-market economy is an economic system in which individuals, rather than government, make the majority of decisions regarding economic activities and transactions. Individuals are free to make economic decisions concerning their employment, how to use or accumulate capital, what expenditures to make, and whether to use their resources now or to save them for later consumption. The principles underlying free-market economies can be traced to the 18th century British economist Adam Smith. (47)According to Smith, individuals acting in their own economic self-interest will maximize the economic situation of society as a whole, as if guided by an "invisible hand". In a free-market economy the government’s function is limited to providing what are known as "public goods" and performing a regulatory role in certain situations.
    (48)Public goods, which include defense, law and order, and education, have two characteristics; consumption by one individual does not reduce the amount of the goods left for others; and the benefits that an individual receives do not depend on that person’s contribution. An example is a lighthouse. One individual’s use of light provided by a lighthouse does not reduce the ability of others to use it. in addition, the lighthouse owner cannot restrict individuals from using the light. (49)The latter illustrates the "free-rider" phenomenon of public goods—both those who helped pay for the lighthouse and those who did not will enjoy the same amount of light. The "free-rider" problem can be eliminated if governments collect taxes and then provide public goods.
    Government’s role in a free-market economy also includes protecting private property, enforcing contracts, and regulating certain economic activities. Governments generally regulate "natural monopolies" such as utilities or rail service. Regulation is used in place of competition to prevent these monopolies from making excessive profits. Governments may also restrict economic freedom for the sake of protecting individual rights. Examples include laws that restrict child labor, or forbid the sale of unsafe goods.
    Proponents of free-market economies believe they provide a number of advantages. They see free-market economies al encouraging individual responsibility for decisions and they believe that economic freedom is essential to political freedom. In addition, many people believe that free markets are more efficient in economic terms. (50)Free markets provide incentives both to individuals to allocate resources such as labor and capital, among the most productive uses, and to firms to produce goods and services that the public want, using the most efficient means of production.

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答案自由市场经济一方面激励个人支配诸如劳动力和资金这样的资源，另一方面促使公司以有效的生产方式提供人们需要的产品及服务。
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