Economics MCQS

671. What is a market economy?
A) An economic system where the government controls all economic activities.
B) An economic system where prices are determined by the government.
C) An economic system where prices are determined by the interactions of buyers and sellers.
D) An economic system where prices are fixed.

672. In a market economy, what role does the government typically play?
A) It controls all production.
B) It sets prices for all goods and services.
C) It provides a legal and regulatory framework for economic activities.
D) It owns and operates all businesses.

673. What is the primary motivation for producers in a market economy?
A) Social welfare
B) Profit maximization
C) Government directives
D) Consumer satisfaction

674. In a market economy, how are resources allocated?
A) According to a central plan devised by the government.
B) Through the forces of supply and demand in the market.
C) Based on government subsidies.
D) Randomly.

675. What is the law of demand in a market economy?
A) As prices rise, demand rises.
B) As prices fall, demand rises.
C) As prices rise, demand falls.
D) As prices fall, demand remains constant.

676. In a market economy, what is the role of prices?
A) Prices are irrelevant.
B) Prices act as signals to guide the allocation of resources.
C) Prices are set by the government.
D) Prices are determined by individual consumers.

677. What is the profit motive in a market economy?
A) To maximize government revenue.
B) To maximize charitable donations.
C) To maximize profits for businesses.
D) To minimize consumer expenses.

678. In a market economy, what happens to businesses that fail to meet consumer demands?
A) They receive government bailouts.
B) They are fined by the government.
C) They may go out of business.
D) They are nationalized.

679. What is competition in a market economy?
A) A government-controlled process to ensure fairness.
B) The rivalry among sellers to attract consumers.
C) Cooperation among businesses.
D) Fixed prices set by the government.

680. How is wealth distributed in a market economy?
A) Equally among all citizens.
B) Unequally based on factors like income and wealth creation.
C) According to a government plan.
D) Randomly.