Question

In a free market economy the allocation of resources is determined by ________________.

• A. votes taken by consumers
• B. a central planning authority
• C. consumer preference
• D. the level of profits of firms

Answer 1

The correct option is C consumer preference

In a free market economy, the products are produced according to the satisfaction of consumers. Therefore, resources for production are allocated after doing a thorough analysis on consumer satisfaction which is regarded as the top most priority without comprising the goal of profit maximization.