In a market economy,firms decide what and how much to produce on the basis of their
A) income, tastes, and market supplies.
B) marginal and average utilities.
C) humanitarian ideals.
D) costs and what they can charge for their products.
E) orders from a central government planning bureau.

Question

Quizplus · Accepted Answer

In a market economy, firms decide what and how much to produce based on their costs and what they can charge for their products. This means that they need to ensure that their costs do not exceed the price consumers are willing to pay for their products and that they can make a profit. This is known as profit maximization, which is a key goal for firms in a market economy.

In a Market Economy,firms Decide What and How Much to Produce