An economic system that answers the What, How, and For Whom questions using prices determined by the interaction of the forces of supply and demand is a:
A) market economy.
B) command economy.
C) traditional economy.
D) none of the above.

Question

Quizplus · Accepted Answer

A market economy is an economic system where prices are determined by the interaction of supply and demand. This system answers the three fundamental questions of What to produce, How to produce, and For whom to produce through the price mechanism. In a market economy, individuals, firms, and government intervene to influence the supply and demand, but the market forces primarily dictate the economy's allocation of resources.

An Economic System That Answers the What, How, and for Whom