In which type of economy are economic decisions made primarily by individuals or through the open market?

A market economy is characterized by the predominance of individual decision-making and the role of open markets in determining the production and distribution of goods and services. In this system, prices are set based on supply and demand, allowing consumers to influence what is produced through their purchasing choices. Producers respond to these market signals, and competition among businesses fosters innovation and efficiency.

In a market economy, individuals are free to make their own economic choices without extensive government intervention, which contrasts with planned economies where decisions are made by a central authority. Mixed economies incorporate elements of both market and planned economies, meaning that while individuals operate in a marketplace, there is also some level of government involvement in economic activities. Socialist economies emphasize collective ownership and redistribution of wealth, focusing on social welfare rather than individual profit.