Which of the Following Statements Is True About a Market

question 27

Multiple Choice

Which of the following statements is true about a market economy?

• A) With a large enough computer, central planners could guide production more efficiently than markets.
• B) Market participants act as if guided by an invisible hand to produce outcomes that maximize social welfare.
• C) The strength of a market system is that it tends to distribute resources evenly across consumers.
• D) Taxes help prices communicate costs and benefits to producers and consumers.

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Definitions:

Marginal Utility

The additional satisfaction or utility that a person receives from consuming one additional unit of a good or service.

Milkshakes

A sweet, creamy beverage made by blending milk, ice cream, and flavorings or sweeteners such as butterscotch, caramel sauce, or chocolate syrup.

Utility-Maximizing

The process or strategy of selecting the combination of goods and services that provides the highest level of satisfaction or utility to an individual.

Pizza

A popular dish of Italian origin, consisting of a flat round base of dough baked with a topping of tomato sauce and cheese, often with added meats, vegetables, or other ingredients.