Which statement best describes a market economy?

A market economy is characterized by the voluntary exchange of goods and services driven by supply and demand. It primarily relies on individuals and businesses making their own decisions regarding production, consumption, and investment. In such an economy, prices are determined through the interactions of buyers and sellers in the marketplace.

Saying that a market economy operates without government involvement emphasizes the idea that the forces of the market primarily govern the economic activities. However, it's important to note that while government involvement is minimal in terms of regulation, it can still play roles such as enforcing property rights and maintaining competition, but the core principle is that the market primarily dictates outcomes based on individual choices.

The other options suggest varying levels of government control, which do not align with the fundamental characteristics of a market economy. For instance, limited government intervention implies some regulation exists, which is not a defining feature of a pure market economy. A fully regulated industry indicates that the government dictates economic activity, contrary to the essence of market freedom. Lastly, central planning entails a significant government role where decisions are made by a controlling body, which fundamentally contradicts what a market economy represents. Thus, the emphasis on an absence of government involvement captures the essence of how a market economy functions.