<Tr> <Td> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> </Td> </Tr> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> A market economy is an economic system in which the decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand . The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production . </P> <P> Market economies range from minimally regulated "free market" and laissez - faire systems - where state activity is restricted to providing public goods and services and safeguarding private ownership - to interventionist forms where the government plays an active role in correcting market failures and promoting social welfare . State - directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning--which guides but does not substitute the market for economic planning--a form sometimes referred to as a mixed economy . </P>

Who makes the decisions in a market economy
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