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JAMB Economics 1979 Question 40

Question 40

Economic Systems

The price mechanism

  1. A.regulates supply and demand
  2. B.rations the consumers
  3. C.rewards the producers
  4. D.allocates scarce resources
  5. E.does all of the above.
Show the answer and explanation

Answer: E (does all of the above.)

Explanation

Prices do several jobs at once: they bring supply and demand together, ration scarce goods among buyers, reward producers with profit and so direct scarce resources to where they are wanted. All four options are functions of the price mechanism.