In which type of economy are decisions made by individuals acting in their own self-interest?

In a market economy, decisions are predominantly shaped by individuals and businesses making choices based on their own self-interest. This economic system thrives on supply and demand, where prices are determined by the interactions of consumers and producers. Individuals in this type of economy pursue their own goals, such as maximizing profits for businesses or utility for consumers, which leads to the efficient allocation of resources.

The self-interested behavior of individuals encourages innovation and competition, driving economic growth. As businesses seek to attract consumers by offering better products or services at lower prices, the overall economy benefits from improved quality and variety in goods. The interconnected decisions of consumers and producers collectively steer the economy, promoting a dynamic and responsive market environment.

In contrast, command, traditional, and planned economies rely on central planning or established customs rather than individual choices guiding the market, which diminishes the emphasis on personal self-interest in decision-making.