Statement I: In a centrally planned economy,consumers do not have to consider prices when shopping.
Statement II: In a capitalist economy the three basic economic questions (what,how and for whom) are determined by the price mechanism.

A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.

Centrally Planned Economy

A type of economic system where decisions about production, investment, prices, and incomes are determined centrally by a government.

Capitalist Economy

A system of economy where the ownership of capital resources is in the hands of private individuals or companies, decisions regarding investments are privately made, and the determination of prices, output, and distribution of products is largely governed by the dynamics of competition in a free-market environment.

Price Mechanism

is the process by which the forces of supply and demand determine the price of goods and services in a market economy.