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In a market economy resources tend to be allocated optimally. Discuss how the interaction of consumers and producers makes this happen.

A free market economy is an economy in which resources are owned by individuals and the decisions on the allocation of those resources are also made by the individuals. The interaction between the consumers and the producers happens right before our eyes, all around us without us even realizing it. It could come from a simple idea that an individual might have. A nephew of mine realized that he had a natural talent of detailing cars, on top of that he enjoyed doing it. He eventually decided he wanted to start his own business, he bought the tools he needed and by selling his labor and the time that comes with it he has thus been successful. All it took was an idea and the interaction with the consumers via social media and other internet services. "Each individual producer makes what they think will be most profitable; each consumer buys what they choose." (Paul Krugman; Robin Wells. Macroeconomics. 2005).