Market Economy
Definition
A market economy is an economic system in which decisions regarding production, distribution, and pricing are based on supply and demand. It operates through voluntary exchange between buyers and sellers.
Related terms
Supply and Demand: This term refers to the relationship between how much of a product is available (supply) versus how much people want it (demand). Prices adjust based on this relationship.
Competition: In a market economy, competition exists among businesses as they strive to attract customers with better products or lower prices.
Private Property Rights: These rights give individuals or businesses ownership over resources such as land or capital in order to use them for production or trade.
"Market Economy" appears in:
Subjects (5)
AP Comparative Government
AP European History
AP Microeconomics
AP US History
Intro to Political Science
Study guides (1)
AP Macroeconomics - 1.1 Scarcity
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About Us
About Fiveable
Blog
Careers
Code of Conduct
Terms of Use
Privacy Policy
CCPA Privacy Policy
Resources
Cram Mode
AP Score Calculators
Study Guides
Practice Quizzes
Glossary
Cram Events
Merch Shop
Crisis Text Line
Help Center
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.