Question : Assertion: Market economy is characterized by decentralized decision-making and private ownership of resources.
Reason: Market economies rely on government intervention to allocate resources efficiently.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Solution : The correct answer is (b) Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
The assertion is true. In a market economy, economic decisions are primarily made by individuals and private firms rather than by the government. Private ownership of resources, such as land, capital, and businesses, is a key feature of a market economy.
However, the reason provided, is not a correct explanation of the assertion. In fact, market economies are characterized by minimal government intervention in the allocation of resources. Market mechanisms, such as supply and demand, price signals, and competition, are relied upon to allocate resources efficiently in a market economy. Government intervention in a market economy is typically limited to providing a legal framework, enforcing property rights, ensuring fair competition, and addressing market failures.
Therefore, the correct answer is Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
