The correct answer contains both components.
“Market economy” describes the role of markets: suppliers compete for customers, people choose between offers and prices respond to economic conditions. “Social” adds responsibility for protection and participation.
Competition also needs rules. Businesses must not eliminate it through prohibited price agreements. State competition oversight and social protection are different tasks, but both contribute to understanding an ordered social market economy.
The other three answers
The incorrect options omit the social element or replace the market economy.
is controlled solely by supply and demand.
“Solely” is the problem here. Supply and demand are part of the system, but this answer omits state rules and social balance.
is planned and controlled by the state, supply and demand are not considered.
Central state planning that disregards supply and demand does not describe the social market economy sought here. Economic decisions generally remain decentralised.
is based on demand abroad.
Demand from abroad can matter to businesses. By itself, however, it neither defines an economic system nor explains social balance.
Balance does not mean identical incomes or state determination of every price.
Social balance aims to cushion social risks and disadvantages. It is not a promise that everyone earns the same amount or that economic differences disappear. Appropriate benefits and rules remain matters for democratic decision-making.
The catalogue answer is a short description of the basic idea. It does not specify contribution rates, benefit entitlements or every exception in price formation. The combination of markets and social responsibility is enough to answer the question.
Competition and its rules · Federal Cartel Office ↗Markets + rules + social balance.
Look for the answer explicitly joining supply and demand with social balance. Only one option contains both.
Three words for this question
- das Angebotsupply / offer
- Goods or services offered in a market.
- die Nachfragedemand
- The desire and economic ability to buy goods or services.
- der soziale Ausgleichsocial balance / redistribution
- Measures intended to cushion social risks and disadvantages.