Free-market principles refer to the economic system where prices for goods and services are determined by open competition among businesses, without significant government intervention. In this system, individuals and companies are free to make their own choices regarding production, consumption, and investment, which encourages innovation and efficiency. One key aspect of free-market principles is the idea of supply and demand. When demand for a product increases, prices tend to rise, prompting producers to supply more. Conversely, if demand decreases, prices fall, leading to reduced production. This dynamic helps allocate resources effectively within the economy, benefiting consumers and producers alike.