Home / Aptitude Tests / Economics / In market economy, t...

In market economy, the question of what, how and for whom...

In market economy, the question of what, how and for whom to produce are solved by the

A.

Elected representative

B.

Planning committee 

C.

Price mechanism

D.

Government

Correct answer is C

The interaction of buyers and sellers in free markets enables goods, services, and resources to be allocated prices. Relative prices, and changes in price, reflect the forces of demand and supply and help solve the economic problem.

The question of what to produce, how to produce and for whom to produce are solved by the prices consumers are willing to pay in exchange for the produced goods, and the price the producers are willing to accept.