Market Economy

The market Opens in new window in general is the process by which all goods and services are sold, while particular markets refer to the purchase and sale of individual products.

A market economy is one in which most of the production decisions are made by entrepreneurs running their own businesses.

Most of what is bought is bought using incomes that have been earned by helping to produce something else.

It is called a market economy because virtually everything is bought using the money one has earned in producing these other products.

There is no predetermined set of goods and services that will be produced, and no already worked out way describing how what is produced should be produced.

A market economy is, instead, a free-flowing set of arrangements in which everyone makes decisions for themselves about what to produce and for whom to work.

The singular characteristic of a market economy is the existence of decentralized decision making in which individuals make their own decision based on the opportunities they recognize, and then use either their own money or the money they have borrowed to put their own plans into operation in the best way they are able to do so.