How are goods and services distributed in a free market system?

Question: How are goods and services distributed in a free market system?

Answer: A free market structure of distribution is largely a product of supply and demand. Producers and sellers set various prices for the goods they supply in the market while consumers, on the other hand, exercise their demand by purchasing what they desire at certain prices. This process of voluntary exchange of goods between buyers and sellers helps to determine the use of resources and the distribution of goods was not the work of central authorities.

The process of distribution is also highly dependent on the price mechanism. Lemke, Bryan G. and Mary Kehoe add that when demand for a product rises, its prices also go up to make producers adjust the supply. On the other hand, when demand falls, the prices drop to make more consumers increase their consumption and producers cut down their supply. This gives a self-regulating mechanism for directing resources where the needs of the consumers are most urgent.