Question

Characteristics of what type of economic system are being described below?

1. basic economic questions answered by forces of the marketplace;
2. consumer demand determines what is produced;
3. competition determines the distribution of goods;

command economies
market economies
transnational economies

Answer 1

These characteristics are talking about market economies. The principles of market economies were formulated by Adam Smith, also known as the father of economics, in his opinion the market was controlled by an invisible hand (demand and supply), so the government was unnecessary to interfere in the market, because it could control by itself.

Answer 2

The list of characteristics here all point to a market economy, in which supply and demand dictate how many goods and services are produced at a given time.