When you go shopping, you usually find all the products and services you are looking for, at prices you are willing to pay. It is actually surprising that somehow merchants in cities as large as New York, Los Angeles and Chicago know what products to stock in their stores and in what quantities. Adam Smith, the father of modern economics, described this situation by saying that the free market economy operates as if an "invisible hand" (the price system) is directing it.

1. What is the process by which the free market economy determines what goods and services should be produced?
2. And how do non-free market economies decide which goods to produce?