when voluntary exchanges in the markets determine decisions on production and consumption, the society's economic system is a?
When voluntary exchanges in the markets determine decisions on production and consumption, the society's economic system is known as a market economy.
To understand why, let's break it down:
1. Voluntary exchanges: In a market economy, individuals and businesses engage in voluntary exchanges, meaning that they willingly trade goods and services with each other based on their own self-interest. Nobody is forced to participate in any transaction.
2. Markets: A market is a place or system where buyers and sellers come together to exchange goods and services. In a market economy, various markets exist for different products or services, such as the stock market, labor market, goods market, etc.
3. Production and consumption decisions: In this economic system, the decisions about what to produce and consume are primarily determined by the interactions between buyers and sellers in the markets. Sellers produce goods and services based on consumer demand, and consumers decide what to consume based on their preferences and purchasing power.
Therefore, when voluntary exchanges in the markets determine decisions on production and consumption, the societal economic system is considered a market economy.