Which of the following statements is true about a market economy?
A)With a large enough computer, central planners could guide production more efficiently than markets.
B)Market participants act as if guided by an invisible hand to produce outcomes that maximise social welfare.
C)The strength of a market system is that it tends to distribute resources evenly across consumers.
D)Taxes help prices communicate costs and benefits to producers and consumers.

Question

Quizplus · Accepted Answer

A market economy relies on the decisions of individual consumers and producers to determine prices and allocation of resources. This decentralized decision-making process is often referred to as the invisible hand, which leads to the production of goods and services that satisfy the wants and needs of consumers, ultimately maximizing social welfare. A centralized planning system would not have the same level of information and efficiency as a market system. Options A, C, and D are not true statements about a market economy.

Which of the Following Statements Is True About a Market