Question

Which statement about a market economy is correct?

Answer 1

Answer:

The statement about a market economy that is correct is Option C: It offers people the freedom to pursue the work and purchases they desire.

Explanation:

A free-market economy works on the principle that government should not do much to control an economy or to add too many protections.  Companies and investors should be free to invest in the kinds of businesses they like -- entrepreneurs should be allowed to enter into creative and innovative ventures without the burden of too much regulation and tariffs and other barriers to trade.  However, even in the United States which is considered the model for a free-market economy, there are certain industries where there is a lot of government regulation and the producers benefit from government subsidies that make it hard for international sources to compete.  This is true in the agricultural sector for example.  American farmers who grow crops like corn, soybeans, wheat, cotton, and rice receive subsidies from the government and it allows them to sell their product much cheaper than if it were truly a free-market.