Which of the Following Statements Does Not Apply to a Market

question 388

Multiple Choice

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 well­being 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.

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Definitions:

IRR

The Internal Rate of Return; a financial metric used to estimate the profitability of potential investments.

Equivalent Annual Annuity

A financial term referring to the annual cash flow from an investment over its lifespan, adjusted to reflect equal annual payments.

Cost of Capital

The target earnings rate that a company seeks on investments to preserve its value in the market and gather funds.

Mutually Exclusive

Decisions or projects that, if chosen, prevent the selection of one or more other options.