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

Mishel Moreno · Accepted Answer

Final Answer : B, Explanation :  In a market economy, the distribution of output is primarily determined by the quantities and prices of the resources that households supply. This means that the market forces of supply and demand dictate how much of each good or service is produced, and at what price. The amount and type of resources (such as labor, land, and capital) that households supply to the market will directly affect the output and distribution of goods and services. While consumer needs and preferences do play a role in the market economy, they are ultimately constrained by the availability and cost of resources. Government regulations and social consensus may also have some influence on the distribution of income, but they are not the primary determinants in a market economy.

Definitions

Learning Objectives

Learning Objectives

Related questions