Our economy thrives on competition. Market forces will lead firms to produce the mix of goods most desired. Unforeseen events can be responded to in a rational manner. The constant struggle for profits will stimulate firms to cut costs. Note that technical efficiency results from attention to self-interest, not the public interest. However, in a market economy business must cater to the whims of consumer tastes or else go out of business.

Explain the importance of the following concepts:

1. Competition
2. Adequate information by all parties in the economy
3. The role of prices in a market economy