Which economic system allows for private ownership and is guided by market forces?

The economic system that allows for private ownership and is guided by market forces is a market economy. In a market economy, individuals and businesses make their own decisions regarding production, investment, and distribution, primarily driven by supply and demand. Prices are determined in the marketplace based on the interactions between buyers and sellers, allowing for efficient resource allocation.

Private ownership is a cornerstone of a market economy, enabling individuals to own property, start businesses, and engage in trade freely. This system encourages competition and innovation, as those who create better products or services can capture a larger share of the market. The minimal intervention from the government in this setting allows for the natural regulation of the economy through fluctuations in pricing and production based on consumer preferences.

While other economic systems exist, they operate differently. A command economy is characterized by government control over resources and decisions, while a traditional economy relies on established customs and practices, limiting innovation and change. A mixed economy incorporates elements of both market and command systems, blending private ownership with some government intervention; however, it does not exclusively focus on market determinants like a pure market economy does.