In a market economy,who makes the decisions that guide most economic activity?
A)firms only
B)households only
C)firms and households
D)government

Question

Quizplus · Accepted Answer

In a market economy, economic decisions are primarily made by firms and households. Firms make decisions about what goods and services to produce, and how best to produce them in order to maximize profits. Households, on the other hand, make decisions about what goods and services to consume, and how much they are willing to pay for them. This interaction of firms and households in the marketplace determines prices and ultimately guides most economic activity. While government may play a role in regulating the market and providing public goods, in a market economy, the decisions of firms and households largely shape the economy.

In a Market Economy,who Makes the Decisions That Guide Most