Use the drop-down menus to complete each sentence about market economies. A market economy is based on the availability of . Companies are to produce products that will generate money. A market economy thrives on , which keeps prices lower as producers react to customer preferences.

A market economy is based on the availability of resources.

Market economies use resources, that are freely exchanged in the free market, guided by prices, which are the signals of economic activity.

A market economy thrives on competition

A market economy thrives on competition because it forces firms to offer either lower prices or higher quality (or both at the same time!) in order to maintain or increase market share. If they did not do this, they would simply lose consumers to other firms offering similar goods and services.

A market economy is based on the availability of  

✔ resources

.

Companies are  

✔ free

to produce products that will generate money.

A market economy thrives on  

✔ competition

, which keeps prices lower as producers react to customer preferences.

correct answers edge2021

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