What describes a market economy that allows free enterprise?

A market economy characterized by free enterprise is one where individuals and businesses have the freedom to operate and make decisions based on supply and demand, without significant government intervention. In this system, prices are determined by the marketplace, reflecting the preferences and actions of consumers and producers.

In a pure market economy, resources are allocated efficiently based on consumer choices and entrepreneurial initiatives, leading to innovation and competition. This environment encourages businesses to respond quickly to consumer needs and preferences, fostering economic growth and variety in goods and services.

While other types of economies may incorporate elements of market mechanisms, they do not emphasize the same level of entrepreneur autonomy and consumer choice as a market economy does. For example, a planned economy is centrally controlled by the government, while a mixed economy combines elements of both market and planned systems but does not wholly embody free enterprise. Traditional economies rely on customs and practices, which limits entrepreneurial freedom even further. Therefore, the correct description of a market economy that allows free enterprise is indeed a market economy.