What is meant by a market economy?
A market economy (or a capitalist economy) is a free economy in which all economic activities are organised through the market, i.e., through market demand and supply. The economy operates automatically through price mechanism. Price mechanism is a system of exchange in which market forces of supply and demand interact freely to determine price of the product. Producers are guided by profit motive and consumers by more satisfaction. Its two main features are private property and private profit motive. It is a form of capitalist economy.
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