GCEEconomicsBasic Economic Concepts2024

In a free market economy, the central economic problem of 'for whom to produce' is resolved by

Agovernment directives and legislation
Bthe purchasing power and income levels of consumersCORRECT
Cthe decisions of trade unions and workers
Dthe country's national development plan
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Why the answer is B, and why the others tempt you.
In a free market economy, the price mechanism determines resource allocation. The question of 'for whom to produce' is answered by consumers' ability to pay — goods and services go to those who have the income and purchasing power to demand them. Government directives and national plans are features of command economies.
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