Chapter 9: Problem 1

Nearly all of our output is produced by (LO1) a) the government b) private business firms c) individual consumers

Short Answer

Expert verified

The correct answer is (b) private business firms, as they are the main driving force behind output production, focusing on producing goods and providing services to cater to the needs and wants of consumers. They contribute to the growth of the economy and create employment opportunities.

Step by step solution

Understanding the roles of the sectors in the economy

In the economy, there are different sectors that play various roles. The government is involved in the provision of public goods and services, regulation, and policymaking. Private business firms focus on producing goods and providing services to achieve profit. Individual consumers are the ones who purchase the goods and services produced by the private business firms. The main goal of the consumers is to satisfy their individual needs and wants.

Analyzing the role of the government in output production

The government is responsible for providing public goods and services, such as infrastructure, education, and healthcare. However, this sector is not directly involved in the production of most goods and services in the economy. Its primary function is to create an enabling environment for other sectors, such as private business firms, to produce goods and services efficiently.

Analyzing the role of private business firms in output production

Private business firms are profit-oriented, focusing on producing goods and providing services that cater to the needs and wants of consumers. They invest in technologies, research, and development to enhance their production capacity. These firms are the main driving force behind output production, as they contribute to the growth of the economy and create employment opportunities.

Analyzing the role of individual consumers in output production

Individual consumers are important as their preferences and needs influence the types of goods and services produced by private business firms. However, they are not directly involved in the production of output. Their role is mainly related to demand rather than supply.

Choosing the correct answer

After analyzing the roles of the mentioned sectors in the economy, it is clear that private business firms are the ones responsible for producing nearly all of our output. Therefore, the correct answer to this question is option (b) private business firms.