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WAEC Economics 2008 Question 9

Question 9

Price Determination

A major function of the price mechanism is that it determines the

  1. A.allocation of resources
  2. B.amount of national savings
  3. C.population of the country
  4. D.number of goods to be taxed.
Show the answer and explanation

Answer: A (allocation of resources)

Explanation

Prices signal where resources are most wanted, so the price mechanism allocates resources.