Question

What is a market economy based on?

traditions and customs

monopoly and economy

government directions and desires

supply and demand

Answer 1

A market economy is primarily based on **supply and demand**. In a market economy, the prices of goods and services are determined by the interactions between consumers and producers. Supply refers to how much of a good or service is available, while demand refers to how much of that good or service people want. This system allows for the allocation of resources based on consumer preferences and market signals.