Question

In a market economy, what dictates how a manufacturer will use their productive resources?

Answer 1

In a market economy, businesses have the freedom to decide how goods and services will be produced. They allocate their productive resources based on consumer demand and market trends.

Step-by-step explanation:

In a market economy, businesses decide how goods and services are going to be produced. They hire labor as they see fit and pay accordingly. This means that manufacturers have the freedom to allocate their productive resources in a way that maximizes their profits and meets consumer demand.

For example, let's say a manufacturer wants to produce smartphones. They will assess consumer preferences and market trends to determine the features and specifications that will make their smartphones attractive to buyers. They will then allocate their resources, such as raw materials, technology, and labor, to produce the smartphones in the most efficient and cost-effective way possible.

The decisions of manufacturers in a market economy are influenced by factors such as consumer demand, competition, availability and cost of resources, technological advancements, and government regulations.

Answer 2

The critical factor influencing the decisions made by manufacturers on what and how to produce certain item is mainly the demand of such item by the market, altogether with the dynamic involving competitors-consumers-price; although governmental regulations could also influence the impact of products in society sometimes.