In a free enterprise economy or market economy the allocation of resources and the factors of production is decided by the pattern of consumer spending. If the economy is operating at maximum capacity, then the only way output could be expanded is by improving the state of technology, i.e. technical progress. In practice most economies are mixed, so they contain elements of both a free market and a command or controlled economy. There is mainly private enterprise and some government intervention. Resources are normally classified into factors of production and earn specific rewards.
Economists have laws, which are observations and can be tested through research.