Administered prices are determined in socialism by:
Options
AMarket Forces
BGovernment
CBoth (a) and (b)
DNone of these
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Introduction to Business EconomicsMTP Apr 21Question 604 of 209
All Questions Correct Answer
✅ Option b — Government
All Options:
- AMarket Forces
- BGovernment
- CBoth (a) and (b)
- DNone of these
Detailed Solution & Explanation
• In a socialist economic system, the government plays a central role in economic planning and resource allocation.
• Administered prices refer to prices that are set or controlled by an authority, rather than being determined by the free interaction of supply and demand in a market.
• In socialism, the government typically owns or controls the major means of production and distribution. To achieve its social and economic objectives, such as ensuring affordability or directing production, the government directly sets the prices for goods and services. This is in contrast to capitalist economies where market forces largely determine prices.
• Therefore, administered prices in socialism are determined by the government.
• Option (A) Market Forces is incorrect because market forces (supply and demand) are the primary price determinants in capitalist or free-market economies, not socialist ones where central planning is dominant.
• Option (C) Both (a) and (b) is incorrect because while some mixed economies might have elements of both, pure socialism relies on government control for administered prices, not market forces.
About This Chapter: Introduction to Business Economics
Paper
Paper 4: Business Economics
Weightage
5%
Key Topics
Meaning, Scope, Price Mechanism
This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.
View Official ICAI SyllabusExam Strategy Tip
Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.
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