Market Economy

Definition

A market economy is an economic system where individuals and businesses make most of the economic decisions based on supply and demand. Prices are determined through free competition without significant government intervention.

Related terms

Supply and Demand: The fundamental forces that determine prices in a market economy. Supply refers to producers' willingness to offer goods or services at different price levels, while demand represents consumers' desire to buy those goods or services at various price levels.

Competition: The rivalry among sellers trying to attract customers by offering better products or lower prices in a market economy.

Private Property Rights: The legal rights individuals have to own property (such as land, buildings, or businesses) in a market economy.