Economics · Types of Economies
An entrepreneur starting a smartphone business finds that he no longer needs centralized government permissions for production, and product pricing is determined by supply and demand interactions via the 'invisible hand'. Which fundamental characteristic of a Market Economy is being experienced here?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Fixed exchange rates and government-mandated administrative interest rates.
- 2Public/State ownership of all means of production to ensure equitable distribution of commercial goods.
- 3Price mechanism acting as an allocative signal based on consumer sovereignty.✓
- 4Centralized economic planning where the state determines the opportunity cost of all production.
Correct answer
Price mechanism acting as an allocative signal based on consumer sovereignty.
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