In a Market Economy

question 18

Multiple Choice

In a market economy,

• A) there is a fixed economic pie to be divided among individuals.
• B) differences in incomes provide individuals with an incentive to supply resources that are highly valued by others.
• C) a central distributing agency carves up the economic pie and allocates slices to individuals.
• D) both a and b above are true.

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Definitions:

Living Standards

The magnitude of economic riches, comfort levels, material acquisitions, and basic livable needs assigned to a particular social strata or region.

International Trade

The exchange of goods and services across national borders, influenced by comparative advantages, tariffs, quotas, and agreements.

Seller

An individual or entity that offers a product or service for sale.

Buyer

An individual or organization that purchases goods or services for personal use or for the purpose of resale.