Which of the following is one way a market economy affects the lives of private citizens?

• A. It eliminates competition among businesses.
• B. It sets prices for goods and services by government decree.
• C. It requires all citizens to work for the government.
• D. It allows individuals to make choices about what to buy and sell.

Answer: (D)

Verified step by step guidance

1. Understand the definition of a market economy: it is an economic system where decisions about production, investment, and distribution are guided by the price signals created by supply and demand, rather than by government control.
2. Recognize that in a market economy, prices are determined by the interaction of buyers and sellers, not set by the government, so the option about government setting prices is incorrect.
3. Note that competition among businesses is a key feature of a market economy, so it does not eliminate competition; rather, competition drives innovation and efficiency.
4. Understand that a market economy does not require citizens to work for the government; instead, individuals have the freedom to choose their employment and economic activities.
5. Conclude that the correct way a market economy affects private citizens is by allowing individuals to make choices about what to buy and sell, reflecting personal preferences and market conditions.