market economy

In 100 words or more reply to statement below about market economy

In a market economy all productive activities are privately owned, meaning that the state does not own them. In a market economy the determination of production comes from the interaction of supply and demand and is signaled to producers through the price system. In a market economy, if there is a high demand for a product that has a limited supply, the price increases. If there is large amount of supply with a low demand for it, prices will decrease. With this type of economy, the consumers signal the producers on if they should produce more or produce less based on the demand for the product.

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