Identify the Incorrect Statement About Market-Directed Economies

question 33

Multiple Choice

Identify the incorrect statement about market-directed economies.

• A) A market-directed economy adjusts itself.
• B) The American economy is completely market-directed.
• C) Consumers in a market-directed economy decide what is to be produced and by whom-through their dollar "votes."
• D) Consumers in a market-directed economy enjoy great freedom of choice.
• E) All of the above are correct.

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Definitions:

Negative Externalities

These are costs that are suffered by a third party as a result of an economic transaction, which are not reflected in the market price.

Positive Externalities

Benefits that are enjoyed by a third-party or the society at large as a result of an economic transaction.

Optimal Output

The level of production at which a firm or economy can produce goods at the lowest average cost, maximizing efficiency.

Government

The system or group of people governing an organized community, often a state, and the mechanisms and institutions through which they rule.