Question

What is the goal of all economic decisions in a market economy?

Answer 1

Market economy is understood as the organization and allocation of the production and consumption of goods and services arising from the interplay between supply and demand. The characteristic that defines the importance of the market economy is that decisions about investment and the allocation of production goods are made mainly through markets.

In a market economy, producers and consumers can interact in the market. It is assumed that both types of economic agents assume the price of the goods as a given data (that is, they are "price acceptors" - "preneurs de prix" in French, "price takers" in English.- See Origin and assumptions in "Law of Walras".) And, from there, they make their production and consumption decisions, seeking to maximize the gain in the case of the bidders and the utility function (satisfaction) in the case of consumers. The participation of these actors, offering and demanding quantities of goods and services, in turn alters market conditions affecting the evolution of prices.