What is a Market Economy?

What is a Market Economy?

Market Economy is also referred to as the Free Enterprise Economy. All the decisions are taken by the consumer and consumers decide how the resources are to be allocated. For instance if a consumer demands a toy, a toy would be produced because the whole system of the Market Economy depends on the price mechanism. The interest of the consumers and producers and safeguarded and only those products are produced which are demanded and can provide profit to the businesses.

The perfect example of a Market Economy is America