Question

Which statement is true of a market economy? A. It depends more on self-interest than a command economy does. B. It eliminates the problem of scarcity, unlike a command economy. C. It prioritizes the public good over personal freedom. D. It requires the approval of a regulatory body for innovation. E. It ensures that everyone will accumulate wealth.

Answer 1

The correct answer is A. It depends more on self-interest than a command economy does.

Explanation:

In the market economy, economical factors are mainly regulated by the actions of individuals and their interests, because these two factors determine supply and demand. For example, the supply of a specific product is determined by the manufactures of this product and their interest in obtaining profits. This does not occur in a command economy because, in this, the general interests of society prevail over self-interests, and economical factors are regulated by the government.

Answer 2

Answer:

The correct answer is A. A market economy depends more on self-interest than a command economy does.

Explanation:

A market economy is an economy where prices are determined by supply and demand in the market, at a price agreed by both buyers and sellers.

In a free-market system, the market and the whole economy are based primarily on the rational allocation of resources, that is, the type and quantity of goods on the market is determined by demand. The effort to achieve the highest possible profit forces the manufacturer to produce as efficiently as possible. This effort to maximize has two sides of the balance sheet: revenue works with the volume and pricing of the final product, but from the point of view of efficiency, on the contrary, it is about minimizing costs and especially not allowing depreciation of entire business cases as losses. The resulting product is then redistributed through the market.