The marketplace is the essence of which of the following economic systems?

• A. Market economy
• B. Traditional economy
• C. Command economy
• D. Mixed economy

Answer: (A)

Verified step by step guidance

1. Understand the definition of a market economy: it is an economic system where decisions regarding investment, production, and distribution are guided by the price signals created by supply and demand.
2. Recognize that a traditional economy relies on customs, history, and time-honored beliefs, rather than market transactions, to make economic decisions.
3. Know that a command economy is characterized by centralized government control over economic activities, where the government makes all decisions about production and distribution.
4. Identify that a mixed economy combines elements of both market and command economies, featuring both private enterprise and government intervention.
5. Conclude that since the marketplace is where buyers and sellers interact freely to exchange goods and services, it is the essence of a market economy.