In a market economy, goods and services are produced and exchanged according to the law of supply and demand. Prices are determined by the interaction of buyers and sellers and serve as signals to producers and consumers about the relative scarcity of goods and services. In a market economy, the government does not plan the production of goods and services or determine how they are to be used.

It does not set prices or tell firms how to produce. Private citizens and businesses make these decisions. The government's role is to provide a framework of laws that allows individuals to make their own economic decisions, reap the rewards from their decisions and suffer the consequences from their decisions.

The market economy is the most productive form of economic organization.

Rather, it establishes the rules of the economic game and the rules through which individuals and businesses make and keep their income. The government also provides goods such as roads or parks that benefit the general public and ensures the smooth flow of goods and services through monetary, banking and other economic systems.
The economic market is where goods and services are bought and sold within the economy while the financial market determines the price on these goods in a given period.