Which of the following best explains how a free-market economy developed in New Jersey?

• A. The region's diverse population encouraged competition and voluntary exchange.
• B. A single dominant industry led to a centrally planned economy.
• C. The absence of natural resources forced reliance on government planning.
• D. Strict government controls limited private enterprise and trade.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the characteristics of a free-market economy, which typically includes voluntary exchange, competition, private enterprise, and minimal government intervention.
2. Step 2: Analyze the options given in the problem to identify which scenario aligns with these characteristics. For example, a diverse population encouraging competition and voluntary exchange fits the free-market model.
3. Step 3: Recognize that a single dominant industry leading to a centrally planned economy contradicts the idea of a free market, as central planning implies government control.
4. Step 4: Note that the absence of natural resources forcing reliance on government planning also suggests more government intervention, which is not typical of a free-market economy.
5. Step 5: Understand that strict government controls limiting private enterprise and trade are inconsistent with a free-market economy, which thrives on limited government interference.