the economic system which relies mainly on the price mechanism for the allocation of scarce resources is known as

The economic system which relies mainly on the price mechanism for the allocation of scarce resources is known as a market or capitalist economic system. In this system, prices are determined by the interaction of supply and demand forces in the market. Producers supply goods and services based on the prices that consumers are willing to pay for them, and consumers allocate their limited resources to the goods and services that provide them with the highest satisfaction or utility. The role of the government in this system is limited, and it generally only intervenes to ensure that markets function properly and to protect property rights.