In which type of economy does consumer preference play the GREATEST role in determining economic activity?
A.
mixed economy
B.
market economy
C.
command economy
D.
traditional economy
B. market economy
The correct answer is B. market economy. In a market economy, consumer preference plays the greatest role in determining economic activity. This is because in a market economy, production and consumption decisions are primarily driven by the choices and demands of consumers. Producers and businesses respond to consumer preferences and adjust their production accordingly to meet consumer demand.
The correct answer is B. market economy.
In a market economy, consumer preference plays the greatest role in determining economic activity. This is because in a market economy, the allocation of resources and production decisions are primarily guided by the forces of supply and demand. Consumers have the freedom to make choices about what goods and services they want to purchase based on their preferences, and producers respond to those preferences by producing the goods and services that consumers are demanding.
To arrive at this answer, we can evaluate the characteristics of each type of economy and determine which one gives consumers the most influence over economic activity.
A mixed economy (option A) combines elements of both a market economy and a command economy. While consumers have some influence in a mixed economy, the government also has a significant role in guiding economic activity and making allocation decisions. Therefore, consumer preference does not play as great a role as it does in a pure market economy.
A command economy (option C) is characterized by central planning and government control over economic activity. In this type of economy, the government determines what goods and services are produced and how resources are allocated, which limits consumer choice and the influence of consumer preference on economic activity.
A traditional economy (option D) is based on customs, traditions, and rituals that guide economic decisions. In this type of economy, economic activity is determined by established practices rather than consumer preference. Therefore, consumer preference does not have as great a role as it does in a market economy.
In conclusion, a market economy (option B) is the type of economy where consumer preference plays the greatest role in determining economic activity.