Question

An economic system in which individuals are free to interact and carry out their economic activities without central control is known as:

• A. Centrally Planned Economy
• B. Mixed Economy
• C. Market Economy
• D. Colonised Economy

Hint:

Market economy works through free interaction of buyers and sellers and the price mechanism.

Answer 1

The Correct Option is C

Concept:
A market economy is an economic system in which economic decisions are mainly taken by individuals, households and firms. The decisions are guided by: \[ \text{demand} \] \[ \text{supply} \] \[ \text{price mechanism} \]

Step 1: Understand freedom of individuals.
The question says individuals are free to interact and carry out economic activities. This means people can decide: \[ \text{what to buy} \] \[ \text{what to sell} \] \[ \text{what to produce} \] \[ \text{where to work} \]

Step 2: Understand absence of central control.
In a centrally planned economy, the government makes major economic decisions. But the question says there is no central control. So, it cannot be a centrally planned economy.

Step 3: Identify the correct system.
An economy based on free interaction of buyers and sellers is called: \[ \text{Market Economy} \]

Step 4: Final conclusion.
Therefore, the correct answer is: \[ \boxed{\text{Market Economy}} \] Hence: \[ \boxed{\text{(C)}} \]