Market Economy

A market economy is an economic system in which the individual people have control, and the government has either a small amount or no amount of control.

Essentially, Consumers and Producers are free to do whatever they want. Producers can set prices as high as they want, however consumers are free to buy or reject those prices, therefore affecting prices. In a market economy, the producer and consumer each benefit from every transaction.

Examples of Market Economies

United States of America

The U.S. is rooted as a market economy, however it still has Government involvement to the degree that it is classified as a Mixed Economy

An example of why the U.S. Economy is a Mixed economy instead of a Market economy is Government taxes for things like Social Security.

United Kingdom

Similar to the U.S. economy, the United Kingdom has a Market Economy, but with limited Government Involvement. Citizens are taxed by the Government for purposes such as Welfare.

Her/His Majesty's Revenue & Customs is responsible for Government Involvement in the UK Economy.


The economy of Canada is also a Market Economy, however there are still taxes that the Government imposes. In fact, taxes in Canada are higher than in the U.S. due to the fact that Canada has free healthcare.

The Connaught Building in Ottawa is home to the Canada Revenue Agency which is responsible for the federal taxes in Canada.

Advantages and Disadvantages


  1. People work harder for their jobs
  2. Increased efficiency due to competition
  3. Great variety of consumer goods
  4. More innovation due to competition
  5. People try to acquire the skills to earn certain jobs


  1. Growing social and economic inequality
  2. Overproduction
  3. Growing unemployment
  4. Worsening ecological degradation because industries want to manufacture more and spend less and actively fight regulations.
  5. Economic crimes such as fraud

Three Basic Economic Questions

Who decides what to produce?

  • Businesses decide what to produce based off of supply and demand. What the consumer wants is what will be produced more.

Who decides how to produce it?

  • The business that is creating the product is in charge of how they want it produced.

Who are the products produced for?

  • The products are produced for the consumers and the consumers are responsible for whether prices rise or drop because of consumer sovereignty.


Comment Stream

2 years ago

This, in my opinion, was a great description of market economy. It offered a broad definition and expressed the ideology behind the economy. The FOPs were clear and blatantly offered, which gives a basic idea of the theory behind the economy.

2 years ago

In my opinion, you have provided just enough information that the website is great. You followed the rubric and you described a market economy in a simple manner. You also have included a good amount of visual aid (pictures).

2 years ago

You've got an adequate site that displays the pros and cons of a market economy, though they could be elaborated on more thoroughly.

2 years ago

The visuals are very helpful in illustrating the topic and providing further information on the topic. The information was clearly organized and summarized the topic well. (Nathan Starks)