In a market economy, how are nonprofit organizations typically supported?

• A. By earning profits from selling goods and services at market prices
• B. Through voluntary donations and private funding from individuals and businesses
• C. Through automatic allocation of resources by the price mechanism
• D. By receiving mandatory funding from the government based on market performance

Answer: (B)

Verified step by step guidance

1. Understand the role of nonprofit organizations in a market economy: they aim to provide goods or services without the primary goal of earning profits.
2. Recognize that unlike for-profit firms, nonprofits do not rely mainly on selling goods or services at market prices to sustain themselves.
3. Identify the common sources of support for nonprofits, which include voluntary donations from individuals and private funding from businesses.
4. Note that nonprofits typically do not receive automatic resource allocation through the price mechanism, as this mechanism primarily governs for-profit market transactions.
5. Acknowledge that while some nonprofits may receive government funding, it is usually not mandatory or based directly on market performance, but rather through grants or subsidies.