Market activity differs from government activity because
A)markets generally force prices to below-cost levels
B)governments never charge for the services they provide
C)markets do not use voluntary exchange mechanisms
D)markets provide a direct link between benefits and costs
E)governments have strong incentives to keep costs under strict control

Question

Quizplus · Accepted Answer

In a market, buyers and sellers engage in voluntary exchange based on their own benefits and costs. This direct link between benefits and costs helps ensure that resources are allocated efficiently. In contrast, government activity often involves taxes and other forms of coercion, which can distort incentives and lead to inefficiencies. Therefore, D is the best choice.

Market Activity Differs from Government Activity Because