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July 10, 2025 

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RATIONAL BEHAVIOR: The notion that people make decisions based on the desire to obtain the greatest amount of satisfaction. Rational behavior essential means that people prefer more to less. The presumption of rational behavior underlies most economic analyses, especially those applied to consumer demand theory.

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PURE MARKET ECONOMY:

An economy, or economic system, that relies exclusively on markets to allocate resources and to answer all three questions of allocation. This theoretical ideal has no governments, markets are used to make all allocation decisions. Then contrasting theoretical ideal is a pure command economy in which governments make all allocation decisions.
Economic Systems
Economic Systems
A pure market economy is a theoretical extreme on the spectrum of economic systems that does not actually exist in the real world. It does, however, provide a benchmark that can be used for comparison with real world economic systems.

In pure market economies, markets are used by buyers and sellers to voluntarily exchange goods, services, and resources. Buyers seek to pay the lowest prices. Sellers seek to receive the highest prices. Resources are allocated to the production of the goods with the highest prices and greatest satisfaction of wants and needs.

The real world embodiment of a pure market economy is termed a market-oriented economy or capitalism. The market-oriented economy of the United States is the primary example.

While, in theory, resource allocation could be undertaken exclusively through markets or governments, in the real world, all economies rely on a mix of both markets and governments for allocation decisions, what is termed a mixed economy.

<= PURE COMMAND ECONOMY


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PURE MARKET ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 10, 2025].


Check Out These Related Terms...

     | pure command economy | command economy | capitalism | socialism | communism | market socialism | market-oriented economy |


Or For A Little Background...

     | mixed economy | economic system | private sector | free enterprise | laissez faire | invisible hand |


And For Further Study...

     | three questions of allocation | distribution standards | government functions | property rights | political views | production possibilities |


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