Paper 3 · November 2022 · Economic Systems
In a free enterprise economy the question of what to produce is settled by
Athe largest firms in each industry, acting together by agreement
Bconsumer spending, since profit is highest where demand is strongest
Cthe pattern of production the country inherited from earlier years
Da planning authority that sets an output target for each industry
Explanation
Consumers vote with their money. A rise in demand lifts the price and widens the profit margin, which signals producers to move resources into that industry, while falling demand drives resources out. No planner is needed for the signal to work.
Derived from ZIMSEC Advanced Level Economics 6073/3 Paper 3, November 2022 session, Q1