Which of the following best describes a market economy?

A market economy is best described as an economy that is driven by the forces of supply and demand. In this system, individual consumers and producers make decisions regarding the production, distribution, and consumption of goods and services. The prices of those goods and services are determined through the interactions between buyers and sellers in the marketplace.

In a market economy, if there is a higher demand for a product, prices tend to rise, incentivizing producers to create more of that product. Conversely, if a product is in low demand, prices may fall, leading to lower production levels. This dynamic system encourages innovation and efficiency, as businesses strive to meet consumer needs and maximize their profits.

While there can be minimal regulations in a market economy, it is primarily characterized by the freedom of individuals to make economic choices rather than a strict absence of regulation or control by the government, which is what makes it distinctly different from a command economy, where the government exerts significant influence over economic activities.