What type of economy lacks significant government intervention and relies largely on supply and demand?

A market economy is characterized by minimal government intervention, allowing supply and demand to dictate the production and pricing of goods and services. In this type of economy, private individuals and businesses make decisions based on their own interests, which helps to allocate resources efficiently.

The forces of supply and demand play a crucial role in determining market prices; when demand for a product increases, prices typically rise, encouraging producers to supply more of that product. Conversely, when demand falls, prices tend to drop, which can lead producers to supply less. This self-regulating nature of a market economy promotes competition and innovation, as businesses aim to meet consumer needs effectively.

In contrast, a traditional economy relies on customs and traditions, often with limited changes in technology or production methods. A planned economy, on the other hand, features significant government intervention, where central authorities make decisions about production and distribution, which can lead to inefficiencies. Meanwhile, a mixed economy incorporates elements of both market and planned economies, with government intervention in certain sectors while mostly allowing market forces to operate independently.