Which of the following is NOT a characteristic of a market economy?

• A. Prices determined by supply and demand
• B. Centralized government planning of resource allocation
• C. Private ownership of resources
• D. Voluntary exchange between buyers and sellers

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the definition of a market economy. A market economy is an economic system where decisions about production, investment, and distribution are guided by the price signals created by supply and demand.
2. Step 2: Identify key characteristics of a market economy, which typically include: prices determined by supply and demand, private ownership of resources, and voluntary exchange between buyers and sellers.
3. Step 3: Recognize that centralized government planning of resource allocation is a feature of a command or planned economy, not a market economy.
4. Step 4: Compare each option given in the problem to the characteristics of a market economy to determine which one does not fit.
5. Step 5: Conclude that the option 'Centralized government planning of resource allocation' is NOT a characteristic of a market economy because it contradicts the decentralized decision-making process inherent in market economies.