Question

The decision about what goods and services will be produced made in a “capitalist” or market economy is made by A) companies that are ultimately controlled and follow the wishes of shareholders looking out for themselves B) Congress voting on what will be produced according to the proposed government budget and environmental concerns. C) firms considering how much it would cost to produce & how much buyers are willing to pay for a product D) utube influencers and the Kardashians  

Answer 1

Option C is correct

• The decision that what goods and services will be produced in a market depends upon the demand for the product and it's cost.
• A producer will be willing to produce those goods which have a high demand in the market as he will be able to charge higher prices. This will increase his total revenue.
• Since we assume that everyone wants to maximize their profits, therefore only those products will be produced which has largest revenues and least costs. (Profit = Total Revenue - Total Costs)
• There is no role of government or any third party in deciding the quantity supplied. The whole process depends upon the interaction of market forces of demand and supply and the costs associated to it.