Question 1
Economic SystemsThe price system refers to the system by which
- A.the government controls prices in the economy
- B.prices tend to rise to a general level
- C.price allocates resources between consumer and producer goods
- D.government allocates resources to consumers and producers
- E.the producers fix the price of their products.
Show the answer and explanation
Answer: C (price allocates resources between consumer and producer goods)
Explanation
Under the price system (market mechanism), prices signal where resources go, deciding how much goes into consumer and producer goods.