Homework 2

Homework #2true, because producer decisions are motivated by the attempt to earn profits. 1. In a market system scarce goods are allocated through the operation ofestimated prices that are determined by consumers and producers acting in their own self-interest.market prices that are determined by consumers and producers acting in their own self-interest.market prices that are determined by consumers and producers acting in the public’s interest.fixed prices that are determined by consumers and producers acting in the public interest.In a command economy scarce goods are allocated byan elected planning board based on the board’s preferences.a government-appointed planning board based on the board’s long-term priorities.an elected planning board based on the board’s long-term priorities.a government-appointed planning board based on the board’s preferences.2.Self-interest helps achieve society’s economic goals becauseas consumers and producers exercise their freedom to act in their own self-interest, markets will produce the desired goods at the lowest possible cost.producers know which goods consumers want the most.consumers and producers both operate based on society’s economic goals.consumers know which goods can be produced at the lowest cost.There is a wide variety of desired goods and services in a market system becauseproducers determine what to produce.individual wants are diverse.consumers change their minds frequently.there is always a need to produce something new and improved.

What is produced is ultimately determined byconsumers because they participate in marketing surveys.consumers because if the goods offered are not what consumers want, consumers will not buy them.producers because they are driven by profits.producers because they determine what to pr

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