What is a key principle of a market economy?

 Goods and services are allocated by individual decision making on a micro-economic level. In general, this creates broader markets in which supply meets demand. Supply Meeting Demand If production for a good is too high, prices fall and enterprises that produce that good will adjust accordingly (or potentially fail, thus decreasing production). If production of a good is too low, then prices climb and profit margins increase. In a healthy market, this attracts more producers of that good. The increased supply will stabilize prices. Supply will not always meet demand in such perfect order because not all markets are the same. Some goods that are produced are limited by their nature, such as gold. Limited goods receive a higher price because production cannot be readily increased. Sometimes regulatory and industry barriers prevent increased production, thus creating limited supply and higher prices. The important feature of a free market economy is that decisions can be made on an individual level, allowing for more precise control of production. This production will naturally change on its own and adapt to new economic, environmental, and social realities. It does this without bureaucrats making decisions or people voting. It is a democracy of dollars where people vote with cash on a daily business, deciding which goods and services are worth buying for a price, and which are not. hope this helps.