Multiple Choice
Which of the following lists best represents four important economic activities in colonial New England?
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0. Basic Principles of Economics
Factors of Production
Multiple Choice
In the context of factors of production, how does the control of resources differ between a market economy and a command economy?
A
Neither market nor command economies involve any control over resources.
B
In a market economy, the government controls all resources, whereas in a command economy, private firms control resources.
C
In a market economy, resources are primarily controlled by private individuals and firms, while in a command economy, resources are controlled by the government.
D
In both market and command economies, resources are equally controlled by private individuals.
Verified step by step guidance1
Step 1: Understand the concept of factors of production, which include land, labor, capital, and entrepreneurship—these are the resources used to produce goods and services.
Step 2: Recognize that in a market economy, the allocation and control of these resources are primarily determined by private individuals and firms through the forces of supply and demand, with minimal government intervention.
Step 3: Contrast this with a command economy, where the government has central control over the allocation and ownership of resources, deciding what to produce, how to produce, and for whom to produce.
Step 4: Analyze the given options by matching them with the definitions: the correct description is that in a market economy, resources are controlled by private individuals and firms, while in a command economy, resources are controlled by the government.
Step 5: Conclude that the key difference lies in who controls the factors of production—private sector in market economies versus government in command economies.
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