Which of the Following Represents Key Strengths of the Market

question 36

Multiple Choice

Which of the following represents key strengths of the market economy as a system of allocation?​

• A) ​Goods and services are allocated based on willingness and ability to pay,
• Rather than based on need.
• B) Producers have strong incentives to innovate because successful innovators
• Are rewarded with higher profit.
• C) Since price is freely set based on supply and demand, shortages and surpluses
• Are minimized.
• D) ​All of the answers above are correct.

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Definitions:

Primary Market

The financial market for new securities issues, where corporations sell new stocks and bonds directly to investors.

New Issues

Securities that are offered to the public for the first time through an initial public offering (IPO) or a secondary offering.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, usually measured by GDP.

Regulatory Relief

Measures or policies implemented by regulatory bodies intended to reduce the burden or improve the conditions for regulated entities, such as easing compliance requirements.