In a market economy,the distribution of output will be determined primarily by:

A) consumer needs and preferences.
B) the quantities and prices of the resources that households supply.
C) government regulations that provide a minimum income for all.
D) a social consensus as to which distribution of income is most equitable.

Question

Giulio Crema · Accepted Answer

Final Answer : B, Explanation :  In a market economy, prices serve as signals for households and firms to make decisions about what to produce and consume. The quantities and prices of the resources that households supply determine the cost of production for firms, which in turn affects the prices of goods and services. As households and firms interact in markets, the distribution of output is then determined primarily by the market forces of supply and demand, as well as the choices made by individual consumers and producers based on their needs and preferences. Government regulations and social consensus may play a role in shaping the distribution of output to some extent, but they are not the primary determinants.

Definitions

Learning Objectives

Learning Objectives

Related questions