Economics: Market Systems and Challenges

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10 Questions

What is the primary goal of producing goods and services in a market economy?

To create a profit

Which method allows consumers to determine which goods will be produced in a market economy?

Dollar votes

What is the primary objective of firms in a market economy when deciding how to produce goods and services?

Minimize cost per unit

Which factor determines who will get the output in a market economy?

Effective demand

What is the primary driver of change in a market economy?

All of the above

What promotes progress in a market economy?

Competition among firms

How do firms decide which production technique to use in a market economy?

By comparing the cost of each technique

What is the primary advantage of a market economy over a command economy?

Greater efficiency in resource allocation

Which of the following is NOT a characteristic of a market economy?

Central planning

What is the primary role of consumers in a market economy?

To determine which goods will be produced

This quiz covers the concept of the 'invisible hand', the virtues of the market system, and the demise of command systems. It explores the ideas of Adam Smith and the challenges faced by command economies.

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