In a market economy, the answers to the three fundamental economic questions are determined by the marketplace (buyers and sellers).

  • Most resources (land, capital) are held in private hands.
  • Resources are allocated very efficiently.
  • Prices are the major influence in economic decision-making.
  • This economy is known also as the capitalist system, free market, or free enterprise.
Producers and consumers use prices to decide what is produced or consumed. Goods and services must be available at prices that allow producers to profit and consumers to purchase. To be successful, businesses must supply what is in demand - the correct goods, at the correct price, and at the correct time. Frequent price adjustments to accommodate changing supply and demand reflect a healthy economic environment.
The total price of production resources determines how goods and services are produced; and, competition among producers affects production prices. An item produced in Taiwan, for example, may cost less than if it was produced in Canada because labour costs in Taiwan are less.

Banking services can be offered personally or online. Because online services are available 24/7, a certain sector of the purchasing public will elect to use online services rather than personal ones.
Goods and services are produced for specific sectors of the marketplace. The iPhone X at a price of $1500, for example, was produced with Gen Z in mind. Younger consumers rarely have that kind of disposable income, and older consumers rarely are interested in spending that kind of money on a cell phone.