In a free-market economy,
A)temporary shortages and surpluses become permanent.
B)economic power is centralized.
C)market failures are automatically corrected.
D)there is no role for government intervention.
E)the existence of profits and losses provide signals to other economic agents.

Question

Quizplus · Accepted Answer

In a free-market economy, the existence of profits and losses provide signals to other economic agents about which goods and services are in demand and which are not. This leads to efficient allocation of resources and correction of market imbalances without government intervention. Therefore, C, D, A, and B are incorrect.

In a Free-Market Economy