Question

In an economy in which decisions are guided by prices and individual self-interest, there isa. the potential to achieve efficiency in production.b. a strong need for government intervention in the market.c. less efficiency than would be observed in a centrally-planned economy.d. more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy.

Answer 1

In a market economy, like the one described in the question, there is the potential to achieve efficiency in production. This is because producers can choose what they produce and can focus on the products they are good at. This can help with economies of scale and efficiency.

Answer 2

Answer:

a. the potential to achieve efficiency in production.

Explanation:

In the type of economy mentioned in the excerpt people are interested in their personal gain and suppliers try to find the most effective way to manufacture their products to offer value to their customers. So, self-interest generates a behavior that benefits everyone as suppliers try to offer a product that is better and cheaper for customers to prefer them as the competition makes them to try to decrease the costs and increase their sells, which at the end provides more efficiency in the production giving benefits to the economy in the long run.

Because of this, the answer is that in an economy in which decisions are guided by prices and individual self-interest, there is the potential to achieve efficiency in production.

The other options are not right because in this type of economy there is no need for a strong goverment intervention because the market tends to regulate itself with the demand and supply and there is more efficiency because suppliers try to offer more products at good prices to be able to compete.