Which of the following observations is true?
A)Free markets will achieve all of society's goals.
B)The ability to buy goods is divided equally among consumers.
C)The market leads to efficiency in production through the profit motive.
D)The market system encourages firms to use inputs wastefully.

Question

Quizplus · Accepted Answer

The profit motive incentivizes firms to produce goods and services efficiently, as they strive to minimize costs and increase profits in order to compete in the market. This leads to a more efficient allocation of resources and production. However, free markets do not necessarily achieve all of society's goals, and the ability to buy goods is not necessarily divided equally among consumers. Finally, the market system does not encourage firms to use inputs wastefully, as this would lead to higher costs and lower profits.

Which of the Following Observations Is True