In a free-market economy that is continually adjusting toward equilibrium,a primary force driving this adjustment is
A)opportunity costs.
B)diminishing returns.
C)the pursuit of allocative efficiency.
D)the scarcity of resources.
E)the pursuit of profits.

Question

Quizplus · Accepted Answer

In a free-market economy, as firms compete with each other to gain more customers and make more profit, they are driven towards producing goods and services that consumers demand the most. This means that resources are allocated efficiently towards producing the goods and services that people value the most, as firms that fail to do so risk making losses or going out of business. Therefore, the pursuit of profits is the primary force driving the adjustment towards equilibrium in a free-market economy.

In a Free-Market Economy That Is Continually Adjusting Toward Equilibrium,a