Which of the following statements does not apply to a market economy?
A)Firms decide whom to hire and what to produce.
B)The "invisible hand" usually maximizes the income of society as a whole.
C)Households decide which firms to work for and what to buy with their incomes.
D)Government policies are the primary forces that guide the decisions of firms and households.

Question

Quizplus · Accepted Answer

In a market economy, decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system. The statement in D does not apply because, in a market economy, government policies are not the primary forces guiding the decisions of firms and households; instead, these decisions are largely made by the firms and households themselves based on market conditions.

Which of the Following Statements Does Not Apply to a Market