A true free market provides the best opportunity for a prosperous and peaceful society. The more we know about how free markets work, the better we can support policies that support a free market. There are six key concepts to remember:
(1) Only individuals actually make economic choices. Corporations, government entities, and other organizations do not make these choices. It’s the individual people within them that do.
(2) The role of exchange and trade. The whole reason people engage in exchange is to improve their well-being. Two individuals agree to a trade when it’s mutually beneficial. They both trade because each person believes he will be better off as a result.
(3) Cost and utility are subjective. A certain product is typically considered more useful or valuable to one person than to another person. Only the chooser can know for sure how valuable a good is to himself or the cost of his actions are to himself.