Journal of Stock & Forex Trading
Open Access

Economy - Peer-review Journals

Market-based economies allow goods to flow freely through the market, according to supply and demand. The United States is considered a market economy where consumers and producers determine what’s sold and produced. Producers own what they make and decide their own prices, while consumers own what they buy and decide how much they’re willing to pay. However, the law of supply and demand can impact prices and production. If consumer demand for a specific good increases and there's a resulting supply shortage, prices tend to rise as consumers are willing to pay more for that good. In turn, production tends to increase to satisfy the demand since produces are driven by profit.  As a result, a market economy has a tendency to naturally balance itself.