<P> A market economy is an economic system where decisions regarding investment , production , and distribution are based on the interplay of supply and demand , which determines the prices of goods and services . The major defining characteristic of a market economy is that investment decisions , or the allocation of producer good , are primarily made through capital and financial markets . This is contrasted with a planned economy , where investment and production decisions are embodied in an integrated plan of production established by a state or other organizational body that controls the factors of production . </P>
who makes the decisions about what to produce in a market economy
capital and financial markets