In an economy in which decisions are guided by prices and individual self-interest,there is
A)the potential to achieve efficiency in production.
B)a strong need for government intervention in the market.
C)less efficiency than would be observed in a centrally-planned economy.
D)more need for a strong legal system to control individual greed than would be needed in a centrally-planned economy.

Question

Quizplus · Accepted Answer

In a market economy, prices serve as signals for firms to produce goods and services in the most efficient way possible. This encourages competition, which stimulates innovation and efficiency. As a result, the potential to achieve efficiency in production is greater in a market economy than in a centrally-planned economy.

In an Economy in Which Decisions Are Guided by Prices