In a market economy, the decision regarding allocation of resources is made by
A)automatic forces of supply and demand.
B)authorities in Washington, D.C.
C)planners in state capitals.
D)committees from a variety of economic interest groups.
E)All of the above are correct.

Question

Quizplus · Accepted Answer

In a market economy, the allocation of resources is determined by the forces of supply and demand in the marketplace. This means that prices, determined by the interaction of buyers and sellers, signal to producers where resources are needed and how much to produce. There is no central authority or committee that dictates allocation of resources.

In a Market Economy, the Decision Regarding Allocation of Resources