Final answer:
In a market economy, consumers and firms determine what to produce based on demand and purchasing power, with production decisions guided by the principles of supply and demand in a system of private decision-making.
Step-by-step explanation:
Who Determines What to Produce in a Market Economy?
In a country operating within a market economy, decisions regarding what to produce, how to produce, and for whom goods and services will be produced are made primarily by consumers and firms. Firms decide the quantity and type of goods and services to produce based on consumer demand, as well as the most efficient production methods given their resources. Instead of a centralized authority like a government making these decisions, the market is guided by the principles of supply and demand, where both suppliers and consumers reach a consensus through the price mechanism.
Overall, the market economy is characterized by private decision-making with little to no government intervention in economic activities. The choices of what goods and services to produce are influenced by the demands of consumers who have the purchasing power. Thus, the consumers' ability to pay plays a significant role in determining what is produced.