Which type of economy allows consumers to dictate what will be produced through their purchasing choices?

A market economy is characterized by the principles of supply and demand, where the decisions regarding production and pricing are driven by consumers and their purchasing choices. In this system, consumers actively participate in the economy by making choices that signal to producers what goods and services are in demand. Businesses respond by adjusting their production to meet these preferences, ultimately leading to a more efficient allocation of resources.

In contrast to a market economy, other types of economies operate under different principles. A planned economy refers to a system where the government or central authority makes all decisions regarding the economy, including what to produce and how to distribute goods. A command economy is similar, with an emphasis on centralized control and administration of economic activities. A mixed economy combines elements of both market and planned economies, but it does not inherently give consumers the same level of influence over production decisions as a market economy does.

Thus, the essence of a market economy lies in its responsiveness to consumer behavior, allowing individuals to dictate production through their spending, making it the correct answer in this context.