Answer:
A market economy is a social system based on the division of labor, in which the price of goods and services is determined by a free price system set by supply and demand. In practice, no country in modern times has been any purely market economy or planning economy; all countries have some kind of mixed economy, which can look in many different ways.
In a market economy, businesses and consumers decide independently what they want to consume and produce, and how they allocate their resources without government intervention. In theory, this would mean, for example, that it would be for the producer and not the state to decide what to produce, how much to produce, how much to charge consumers for products, what to pay to workers, etc. These decisions are influenced by competition, supply and demand. The opposite is the planned economy, or command economy; it is for the State to decide what is produced and to what extent, and to whom the goods produced are distributed. Competition in the market economy leads to the promotion of cheaper and higher quality goods.
