The correct answer is: Option 3 Market economy
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Centrally planned economy: Incorrect. In this type of economy, the government makes most economic decisions, including what goods and services are produced, how much is produced, and at what prices. Price mechanism plays a minimal role.
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Mixed economy — Incorrect. The statement is not correct because decisions are taken partly by the government and partly by the market, so it is not purely based on price mechanism.
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Market economy — Correct. The complete statement is correct because all economic activities are organised through the market, where demand and supply (price mechanism) determine decisions.
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