What is produced and consumed in the economy is determined jointly by
A) government policies and the economy's productive capacity.
B) the economy's productive capacity and the preferences of consumers.
C) the preferences of consumers and the behavior of business managers.
D) the behavior of business managers and government policies.

Question

Quizplus · Accepted Answer

The economy's productive capacity determines the maximum amount of goods and services that can be produced, while the preferences of consumers determine the types and quantities of goods and services that are actually produced and consumed. Business managers play a role in producing goods and services, but their behavior is primarily determined by the profitability of their activities, which is influenced by consumer preferences and government policies. Government policies can also affect the economy's productive capacity, but ultimately it is consumer preferences that determine what is produced and consumed.

What Is Produced and Consumed in the Economy Is Determined