In a market system, the what, how and for whom questions in economics are determined by
A) those who are not in the market.
B) buyers and sellers together.
C) the central authority.
D) no one.

Question

Quizplus · Accepted Answer

In a market system, buyers and sellers interact in the marketplace and determine what goods and services are produced (what), how they are produced (how), and who gets them (for whom). This is known as the price mechanism or the invisible hand, where prices serve as signals for producers and consumers to adjust their behavior in response to market conditions. The central authority (C) does not determine these decisions in a market system, and the idea of no one (D) determining them is unrealistic as buyers and sellers are constantly making these decisions through their interactions in the marketplace. Option A is incorrect as it suggests that those who are outside the market have an influence on the decisions made in the market system.

In a Market System, the What, How and for Whom