Market economy

A market economy is an economy in which all the important buy and sell choices are made on markets. In a market economy, markets is used to decide what is to be produced in the country, how it is produced and how the production revenue will be allocated.

In a market economy, the negotiations between buyers and sellers determines what to produce and how much. In a market economy, the compensation to the labor are determined in a labor market and the income distribution is determined in the labor market. A market economy is flexible and will maximize the benefit and prosperity of a country.

An unregulated market economy may give an unfair distribution of income and an unregulated market economy might not create the conditions for the production of certain products that are desirable in society such services to rural areas.