What is a market economy?
A market economy is an economy in which consumers decide the answers to the three fundamental economic questions. These questions are what to make, how to make it, and for whom to make it. In a market economy (such as that of the United States), companies decide what they want to make. They put their products on the market and see which ones are bought. The choices consumers make in buying or not buying decide what gets made (along with how to make them and who they get made for). This is in contrast to other systems in which the government (command economy) or tradition (traditional economy) determines the answers to the three fundamental economic questions.