In which economic system will profit motivate entrepreneurs to use resources efficiently and to produce goods that consumers want?

Question

Quizplus · Accepted Answer

In a market economy, profit is the driving force that motivates entrepreneurs to use resources efficiently and produce goods that consumers want. The market determines the price and quantity of goods and services, and producers are incentivized to make choices that maximize their profits. In a centrally planned economy, production decisions are made by the government rather than by market forces, so profit does not play a significant role in resource allocation. Communism and socialism favor collective ownership of resources and means of production, and often involve the government controlling resource allocation rather than private businesses motivated by profit. A barter economy relies on the exchange of goods and services without the use of money, so profit is not a driving factor for resource allocation.

In Which Economic System Will Profit Motivate Entrepreneurs to Use