In a market economy,

A) there is a fixed economic pie to be divided among individuals.
B) differences in incomes provide individuals with an incentive to supply resources that are highly valued by others.
C) a central distributing agency carves up the economic pie and allocates slices to individuals.
D) both a and b above are true.

Market Economy

An economic system in which supply and demand from consumers and businesses guide the production, distribution, and pricing of goods and services.

Economic Pie

A metaphor for the total amount of wealth or resources available in an economy.

Central Distributing Agency

An organization or entity responsible for the centralized procurement and distribution of goods or services.