Question

Prices enable a market economy to adjust to unexpected events bya.maintaining consumption and production at stable levels.b.government rationing.c.ensuring that producers always earn a profit.d.adjusting consumption and production

Answer 1

Prices enable a market economy to adjust to unexpected events by adjusting consumption and production.

Option: D

Explanation:

The Government commands significant aspects of economic activity in a centrally planned economy. The government determines the factors of production and owns the enterprises which produce public goods and services. The government is pricing and manufacturing products and services which it believes help individuals. The unexpected events may be like the ongoing corona-virus pandemic, during this phase of economy the states are regulated by adjusting the production and consumption in market, either by decreasing the price of some commodities or by maintaining supply in market.