Question

characteristics of a market system quiz
economics / module 1: basic economic concepts

1. which of the following is not an appropriate role for government in a market economy?

○ correct market failures
○ enforce contracts
○ provide public goods
○ set prices for most goods and services

Explanation:

In a market economy, the price mechanism is typically driven by supply and demand in the free market. The government's appropriate roles include correcting market failures (like externalities), enforcing contracts (to ensure legal and economic order), and providing public goods (which the private sector may underprovide). However, setting prices for most goods and services goes against the market - driven price determination and is not an appropriate role for the government in a market economy.

Answer:

D. set prices for most goods and services