MARKET SYSTEM

1. Which of the following are primarily responsible for making economic decisions in a pure market economy?

the central government

Think again. .

It is in a command system that the central government is the most important decision maker. In a pure market economy, the decisions are made by individual consumers and suppliers.

large corporations

Think again.

In a pure market economy, the decisions are made by individual consumers and suppliers and not large corporations.

regulators and bureaucrats

Think again.

In a pure market economy, the decisions are made by individual consumers and suppliers and not large corporations.

regulators and bureaucrats

Think again.

It is in a command system that the central government as well as regulators and bureaucrats are important decision makers. In a pure market economy, the decisions are made by individual consumers and suppliers.

individual consumers and suppliers

You are right!

In a pure market economy, the decisions are made by individual consumers and suppliers and not large corporations. In a command system, decisions are made by the central government as well as regulators and bureaucrats.

2. Indicate whether the following statements are true or false:

In a pure market economy, the “for whom” or distribution question is largely answered according to the needs and wants of individuals and groups in society.

true

Think again. The statement is false.

In a pure market economy, you need an income in order to purchase goods and services to satisfy your needs and wants. It is the needs and wants of those with income that are satisfied.

false

You are right!

In a pure market economy, you need an income in order to purchase goods and services to satisfy your needs and wants. It is the needs and wants of those with income that are satisfied.

3. In a pure market economy, the price mechanism plays an important role in solving the economic problem.

true

You are right! The statement is true.

In a market system, it is the forces of demand and supply which determine the prices of goods and services, and consumers and suppliers make decisions on the basis of these prices.

false

Think again. The statement is true.

In a market system, it is the forces of demand and supply which determine the prices of goods and services, and consumers and suppliers make decisions on the basis of these prices.

5. A strength of the market system is that it provides an incentive for people to work hard.

true

You are right! This statement is true.

To be able to satisfy their needs and wants, people must have an income, and income is earned through making a contribution to the production of goods and services. Therefore, there is a motivation to work hard.

false

Think again. The statement is true.

To be able to satisfy their needs and wants, people must have an income, and income is earned through making a contribution to the production of goods and services.

Glossary

1. Which of the following are primarily responsible for making economic decisions in a pure market economy?

2. Indicate whether the following statements are true or false:

3. In a pure market economy, the price mechanism plays an important role in solving the economic problem.

4. In a market system, prices are determined by government bureaucrats.

5. A strength of the market system is that it provides an incentive for people to work hard.