Question

Which type of economy gives rise to the most efficient allocation of resources and capital in the standard micro economics framework?

• A. Free market economy
• B. Command market economy
• C. Controlled market economy
• D. Regulated market economy

Answer 1

The correct option is A Free market economy

In a free market economy, prices of the commodities are affected by the free play of market forces, i.e. demand and supply which leads to open competition in the economy. Thus, it facilitates most efficient utilization of resources. Wastage of resources is usually prevented in free market economy.