Market-oriented Economy

Definition

A market-oriented economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand.

Analogy

Think of a school cafeteria where students can choose what they want to eat. The most popular items (high demand) might be priced higher, while less popular ones (low demand) might be cheaper. This is similar to how a market-oriented economy works.

Related terms

Capitalism: An economic system characterized by private ownership of goods and services for profit. It's essentially another name for a market-oriented economy.

Supply and Demand: These are economic model principles that determine pricing in a market. In a market-oriented economy, these two forces drive most decisions.

Free Trade: The policy of allowing businesses in different countries to trade without government interference; it's often associated with market-oriented economies as it relies on the same principles of supply and demand.