What is a defining characteristic of a market economy?

Answer 1

A defining characteristic of a market economy is the predominance of supply and demand in determining prices and the allocation of resources. In a market economy, individuals and businesses make decisions regarding production, investment, and consumption based on their own interests, and these decisions are influenced by competition and consumer preferences. This contrasts with a planned economy, where such decisions are made by a central authority. Additionally, market economies typically feature limited government intervention, allowing for greater flexibility and responsiveness to changes in the market.