Question : A capitalist economy uses ____________as the principal means of allocating resources.
Option 1: demand
Option 2: supply
Option 3: efficiency
Option 4: prices
Answer (1)
25th Jan, 2024
Correct Answer: prices
Solution :
The correct answer is (d) prices.
In a capitalist economy, prices are determined by the forces of demand and supply. The higher the demand for a good or service, the higher the price will be. The lower the supply of a good or service, the higher the price will also be. This price mechanism helps to allocate resources efficiently, as it ensures that goods and services are produced and consumed in the quantities that people want.
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