Question

In a market economy, the central problems are solved by?

• A. Supply of goods
• B. Planning authority
• C. Demand for goods
• D. Market mechanism

Answer 1

Answer:

D. Market mechanism

To solve the problems through market or price mechanisms ie., what goods are to be produced and what quantities, which methods for production are to be employed for the production of goods and how the output is to be distributed, should be decided by the free play of the forces of demand and supply.