Question
Which definition below best describes a market economy? With no interference from the government, consumers and producers answer the three economic questions. With input from the government, consumers and producers answer the three economic questions. With little to no input from anyone else the government answers all three economic questions. With little to no input from anyone else.the government answers all three economic questions.
Answer
4.7
(254 Votes)
Delilah
Veteran · Tutor for 9 years
Answer
The definition that best describes a market economy is: With no interference from the government, consumers and producers answer the three economic questions.
Explanation
To determine which definition best describes a market economy, we need to understand the characteristics of different economic systems. There are primarily three types of economic systems: market economies, command economies, and mixed economies.1. **Market Economy**: In a market economy, the economic questions of what to produce, how to produce, and for whom to produce are answered by the interactions of consumers and producers in the marketplace. Prices are determined by supply and demand, and there is minimal government intervention. The forces of competition and private ownership are emphasized.2. **Command Economy**: In a command economy, the government answers the three economic questions. The government decides what goods and services are produced, how they are produced, and who gets them. There is significant government control and planning, and private property is often limited.3. **Mixed Economy**: A mixed economy features elements of both market and command economies. The government has a role in regulating the economy and may provide certain services, but consumers and producers still play a significant role in answering the economic questions through market mechanisms.Now, let's evaluate the definitions provided:- The first definition ("With no interference from the government, consumers and producers answer the three economic questions.") aligns with the concept of a pure market economy, where the government's role is minimal or non-existent.- The second definition ("With input from the government, consumers and producers answer the three economic questions.") suggests a mixed economy, where both the market and the government have roles in the economic decision-making process.- The third and fourth definitions ("With little to no input from anyone else, the government answers all three economic questions.") describe a command economy, where the government has the primary or sole responsibility for economic decision-making.