CMA Foundation · Fundamentals of Business Economics and Management · The Fundamentals of Economics
In a market economy, the problem of 'for whom to produce' is primarily resolved by which of the following?
In a market economy the 'for whom to produce' problem is settled by the distribution of income and purchasing power. Goods and services go to those consumers who are willing and able to pay the market price, rather than being allocated by a central authority.
- AThe distribution of income and purchasing power among consumersCorrect
- BThe central planning authority's allocation orders
- CThe age of the producers
- DThe quantity of imports permitted
Explanation
In a market economy, goods go to those who have the ability and willingness to pay, which depends on income distribution. A central planning authority performs this role in a planned economy, not a market economy. Age of producers and import quantity do not determine distribution.
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