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In a free enterprise economy, resource allocation is determined by
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- the pattern of consumers’ spending
- the wealth of the entrepreneurs
- decision of the Government
- the traditional employment of factors
- the pattern of consumers’ spending
Correct Option: A
In a free market economy, resources are allocated through the interaction of free and self-directed market forces. This means that what to produce is determined by consumers’ capacity to spend. How to produce is determined by producers, and who gets the products depends upon the purchasing power of consumers.
