Question

30. What does an economy need in order to keep prices low, offer consumers a wide variety of choices, and encourage innovation?

    A) The implementation of communism and heavy government regulation
    B) The implementation of socialism and give the poor a basic universal income

    C) Encourage the use of competitive markets, flexible prices, private property rights, respect     for contract law, and individual liberty

    D) Encourage fairness, social justice, eliminate income inequality, and regulate all personal     income to make sure everyone gets the same amount.

Answer 1

30. Option C - Encourage the use of competitive markets, flexible prices, private property rights, respect for contract law, and individual liberty.

In order to keep prices low, there should be a competitive market i.e. a market where there are many sellers and not a monopoly market with a single seller or a oligopoly market with few sellers who can charge abnormally high prices. With many sellers, a wide variety of goods can be available in the market. To encourage innovation, there must be private property rights, respect for contract law, and individual liberty so that people get the incentive to innovate new products and from where they can earn good profit by creating new technology.

The other options which talks about encouraging communism, socialism, heavy government regualtion, encouraging fairness and social justic by government regulation does not help offer consumers a wide variety of choices as sellers would be lesser in number and also encourage innovation as nobody would get the incentive for innovating and making profit from it if there is so much government control.