According to the idea of laissez-faire government, when does the economy perform the best?

• A. When the government minimizes its intervention in markets
• B. When the government heavily regulates production and consumption
• C. When the government sets prices for goods and services
• D. When the government owns most of the resources and businesses

Answer: (A)

Verified step by step guidance

1. Understand the concept of laissez-faire government, which advocates for minimal government intervention in the economy, allowing free markets to operate on their own.
2. Recognize that according to laissez-faire theory, the economy performs best when market forces of supply and demand determine production, prices, and consumption without government interference.
3. Analyze the options given: heavy regulation, price setting, and government ownership of resources all represent forms of intervention that contradict laissez-faire principles.
4. Conclude that the economy performs best under laissez-faire when the government minimizes its intervention in markets, allowing private individuals and businesses to make economic decisions freely.
5. Summarize that minimal government intervention leads to efficient allocation of resources, innovation, and economic growth according to laissez-faire economics.