Question

In a capitalistic economy what to produce depends on __________.

• A. government's policy
• B. consumer's preference
• C. profits of firm
• D. none of these

Answer 1

The correct option is B consumer's preference

In a capitalistic economy what to produce depends on consumers preferences. Consumers and producers make their choices based on the market forces of demand and supply in Capitalist economy, also called the market economy. In this, the prices are determined by the free interaction of the forces of demand and supply. It is an automatic self-regulating mechanism which runs with the motive of profit.