What is the economic system called where decisions are determined by market interactions between buyers and sellers?

The correct answer signifies an economic system where the choices made by individuals and businesses in the market dictate the production, distribution, and pricing of goods and services. In a market economy, supply and demand drive decision-making, meaning that if more buyers want a particular product, its price will rise, encouraging producers to supply more of it. Conversely, if demand falls, prices will drop, leading producers to reduce their output.

In this environment, consumers have the power to influence the market through their purchasing decisions, while businesses respond to these signals to maximize their profits. This free interaction fosters innovation and efficiency as competition compels businesses to improve products and services to attract customers.

Other systems, such as traditional, command, and mixed economies, involve varying degrees of government involvement or adherence to cultural practices, which means that market interactions do not play as dominant a role in determining economic outcomes as they do in a market economy.