Question 19
Economic SystemsWhich of the following is an important function of prices in a market economy?
- A.Ensuring that resources are used in the most efficient manner
- B.Ensuring an equitable distribution of goods and services
- C.Ensuring that all industries are perfectly competitive in the long run
- D.Equating level of purchases with level of needs.
Show the answer and explanation
Answer: A (Ensuring that resources are used in the most efficient manner)
Explanation
Prices signal where resources are most valued, so in a market economy they guide resources to be used efficiently. Prices do not ensure fairness or meet needs people cannot pay for.