Markets are advantageous over central planning as methods of resource allocation because:
A) resources travel to their highest value uses.
B) resources are allocated equally across all uses.
C) resources are distributed to those goods that have a larger number of substitutes.
D) central planners have never been shown to correctly identify high value uses of products.

Question

Quizplus · Accepted Answer

Markets allow resources to flow to their highest value uses because prices adjust to reflect the relative scarcity and demand for goods and services. This creates incentives for producers to allocate their resources in the most efficient way possible. Central planners, on the other hand, may lack the necessary information or incentives to allocate resources in the most optimal way, leading to inefficiencies and waste.

Markets Are Advantageous Over Central Planning as Methods of Resource