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JAMB Economics 2012 Question 20

Question 20

Economic Systems

An important function of the price system is to

  1. A.ensure that producers' profits remain high
  2. B.guarantee full employment of resources
  3. C.allocate resources to most productive uses
  4. D.protect the economic interests of government.
Show the answer and explanation

Answer: C (allocate resources to most productive uses)

Explanation

Prices signal where resources earn the most, so they move resources into their most productive uses.