A market economy, also known as a free-market economy, is an economic system where decisions regarding investment, production, and distribution are driven by the interplay of supply and demand in the marketplace.
Here are some key features or fundamentals of a market economy:
Private Ownership: Resources such as land, labor, and capital are predominantly owned by private individuals or entities rather than the state.
Decentralized Decision-Making:Economic decisions are made by individual consumers, producers, and investors rather than a central authority. This decentralization allows for a more flexible and responsive system.
Profit Motive: The primary objective of businesses and individuals is to maximize profits. This profit motive serves as a powerful incentive for innovation, efficiency, and entrepreneurship.