Economic shifts from state control to market forces

Steps:

• Recall planned economy features: government sets prices, owns resources, provides merit goods like education, maintains low visible unemployment.
• Recall free market features: prices via supply-demand, private ownership dominant, merit goods underprovided without subsidies, structural unemployment from job reallocations.
• Examine transition effects: prices rise from shortages and liberalization, private resources grow via privatization, merit goods decline as state withdraws, unemployment rises from industry restructuring.
• Identify least likely to increase: the option decreasing due to reduced government role.

Why B is correct:

• Merit goods rely on government intervention for positive externalities; free markets underprovide them without subsidies, so provision falls in transition per public goods theory.

Why the others are wrong:

• A: Prices rise as fixed controls end, reflecting true scarcity and demand.
• C: Privately owned resources surge through widespread privatization of state assets.
• D: Structural unemployment grows as inefficient sectors close and labor shifts.

Final answer: B