In a market economy,
A)Resources are allocated by the private parties who own the resources
B)Resources are allocated by the various local,state,and federal planning committees and zoning commissions
C)Shortages never exist
D)Surpluses never exist
E)Both c and d

Question

Quizplus · Accepted Answer

In a market economy, resources are allocated based on the decisions made by private parties who own them, such as individuals, households, and firms. These decisions are largely guided by the prices and signals of supply and demand in the market. Therefore, the allocation of resources in a market economy is primarily driven by market forces rather than central planning, which is characteristic of a command economy. Shortages and surpluses can and do exist in market economies due to changes in supply and demand.

In a Market Economy