Which of the following is a key factor in determining the allocation of resource
Practice Questions
Q1
Which of the following is a key factor in determining the allocation of resources in a market economy? (2023)
Government regulations.
Consumer preferences and demand.
Historical resource usage.
Random selection.
Questions & Step-by-Step Solutions
Which of the following is a key factor in determining the allocation of resources in a market economy? (2023)
Step 1: Understand what a market economy is. A market economy is a system where resources are allocated based on supply and demand.
Step 2: Identify what 'resource allocation' means. Resource allocation refers to how resources like money, labor, and materials are distributed to produce goods and services.
Step 3: Recognize the role of consumer preferences. In a market economy, what consumers want (their preferences) influences what products are made.
Step 4: Understand demand. Demand is how much of a product consumers want at a given price. Higher demand usually means more resources are allocated to produce that product.
Step 5: Conclude that consumer preferences and demand are key factors in deciding how resources are used in a market economy.
