Question

Which of the following statements best characterizes a basic difference between market economies and centrally- planned economies?Society relies more upon prices to allocate resources when the economy is centrally-planned than when it is market-based.The self-interest of households is reflected more fully in the outcome of a centrally-planned economy than in the outcome of a market economy.Government plays a larger role in the economic affairs of a market economy than in the economic affairs of a centrally-planned economy.

Answer 1

This is a trick question, none of these answers are correct.

1. Society only relies on prices in a market economy, In a planned economy, the government sets prices usually,

2. Self-interests of households are reflected in a market economy because consumers can make their own decisions.

3. Government plays a larger role in a planned economy.