In a market economy,

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In a market economy, prices are determined by the interaction of supply and demand, and these prices are what allocate scarce resources. As prices for a good or service increase, producers are incentivized to increase supply to meet the heightened demand, and consumers are incentivized to seek alternatives or reduce their consumption. Conversely, if prices decrease, producers may decrease supply, and consumers may increase their demand. This constant adjustment of supply and demand based on changing prices is what allows a market economy to function.

In a Market Economy