Question 1.1

1. The invisible hand harnesses the power of self-interest for the good of society.

   This statement is a feature of a market economy. The invisible hand refers to the way in which the individual pursuit of self-interest can lead to good results for society as a whole.

2. A central authority makes decisions about production and consumption.

   This statement is not a feature of a market economy. In a market economy, production and consumption decisions are the result of decentralized decisions by many firms and individuals. In a command economy, a central authority makes decisions about production and consumption.

3. The pursuit of one’s own self-interest sometimes results in market failure.

   This statement is a feature of a market economy. Sometimes the pursuit of one’s own interests does not promote the interests of society as a whole. This can lead to market failure.

4. Growth in a market economy is steady and without fluctuations.

   This statement is not a feature of a market economy. Although the economy grows over time, fluctuations are regular features of market economies.