What are indicators of a Free Market Economy? Choose all that apply.
Responses
A Buyers go to government markets with ration coupons.Buyers go to government markets with ration coupons.
B Sellers raise prices because of demand and scarcity.Sellers raise prices because of demand and scarcity.
C Buyers and Sellers set market prices on goods and services.Buyers and Sellers set market prices on goods and services.
D The government decides career paths for 18 to 24-year-olds.The government decides career paths for 18 to 24-year-olds.
E Producers only build and create items that make the most profits.
B Sellers raise prices because of demand and scarcity.
C Buyers and Sellers set market prices on goods and services.
E Producers only build and create items that make the most profits.
B Sellers raise prices because of demand and scarcity.
C Buyers and Sellers set market prices on goods and services.
E Producers only build and create items that make the most profits.
The indicators of a Free Market Economy are:
B) Sellers raise prices because of demand and scarcity.
C) Buyers and Sellers set market prices on goods and services.
E) Producers only build and create items that make the most profits.
To determine the indicators of a Free Market Economy, we need to understand the characteristics of such an economy. In a free market economy, the government intervention is limited, and economic decisions are primarily driven by supply and demand in the market.
Indicator B (Sellers raise prices because of demand and scarcity) reflects the principle of supply and demand. In a free market economy, sellers have the freedom to adjust prices based on the level of demand and the scarcity of goods. When demand increases or supply decreases, sellers may raise prices.
Indicator C (Buyers and Sellers set market prices on goods and services) highlights the importance of free interaction between buyers and sellers. In a free market economy, buyers and sellers negotiate and determine the prices of goods and services based on mutual agreement. Market forces of supply and demand play a significant role in shaping these prices.
Indicator E (Producers only build and create items that make the most profits) reflects the profit motive in a free market economy. Producers have the freedom to decide what goods and services to produce based on their profitability. They are incentivized to create items that generate the highest profits.
Indicators A (Buyers go to government markets with ration coupons) and D (The government decides career paths for 18 to 24-year-olds) are not characteristic of a free market economy. A free market economy relies on voluntary exchanges and limited government intervention, whereas indicators A and D imply government control and intervention in the market.