Which of the following statements does not apply to a market economy?
A) Firms decide whom to hire and what to produce.
B) The "invisible hand" usually maximizes the wellbeing of society as a whole.
C) Households decide which firms to work for and what to buy with their incomes.
D) Government policies are the primary forces that guide the decisions of firms and households.

Question

Which of the following statements does not apply to a market economy?
A) Firms decide whom to hire and what to produce.
B) The "invisible hand" usually maximizes the well­being of society as a whole.
C) Households decide which firms to work for and what to buy with their incomes.
D) Government policies are the primary forces that guide the decisions of firms and households.

Quizplus · Accepted Answer

The statement "Government policies are the primary forces that guide the decisions of firms and households" does not apply to a market economy. In a market economy, government intervention is limited and firms and households make their own decisions based on market forces.

Which of the Following Statements Does Not Apply to a Market