Question 15
Economic SystemsThe main function of price in the economic system is to
- A.allocate scarce resources among competing uses
- B.ensure equitable distribution of income and wealth
- C.determine the demand for and the supply of goods and services
- D.remove all the constraints on production of goods and services.
Show the answer and explanation
Answer: A (allocate scarce resources among competing uses)
Explanation
Prices signal where resources are most wanted, so they share out scarce resources among their competing uses.