AP Macroeconomics Question 413: Answer and Explanation

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Question: 413

12. In the last 20 years, firms that produce cameras have begun to produce fewer 35-mm cameras and more digital cameras. This trend is an example of

  • A. how central planners dictate which cameras are produced.
  • B. the market system answering the question of "how" cameras should be produced.
  • C. the market system answering the question of "what" cameras should be produced.
  • D. the market system answering the question of "who" should consume the cameras that are produced.
  • E. how firms fail to respond to improvements in technology and changes in consumer tastes.

Correct Answer: C

Explanation:

C-The free market responds to changes in consumer tastes, technology, and prices to produce “what” is most wanted by society.