Question

question 1 (1 point)
what happens when goods are available in an economy free of charge?
a) goods are not available in market economies free of charge.
b) too many of these goods will be produced since there is no cost of production.
c) the product will have no value for the majority of the population.
d) market forces cannot be used to allocate resources.

Explanation:

When goods are free of charge, the price mechanism (a key market force) which allocates resources based on price signals (demand and supply interactions via price) cannot operate.

• Option a is incorrect as some goods (like public goods) can be available free in market economies.
• Option b is wrong because even if goods are free, there are production costs (resources are scarce).
• Option c is incorrect as value is subjective; just because a good is free doesn't mean it has no value for most.

Answer:

d) Market forces cannot be used to allocate resources.