In a market system, the primary instruments used to coordinate economic activity are
A)plans.
B)prices.
C)input-output analyses.
D)quantities.

Question

Quizplus · Accepted Answer

In a market system, prices serve as signals that coordinate economic activity by indicating relative scarcities and surpluses of goods and services. Consumers respond to higher prices by reducing demand, while producers respond by increasing supply. Similarly, lower prices stimulate demand and reduce supply. This constant interaction between buyers and sellers in the market ensures that resources are allocated efficiently and that production satisfies consumer needs and wants. Plans, input-output analyses, and quantities may play a role in decision making, but they are secondary to prices in determining how resources are allocated.

In a Market System, the Primary Instruments Used to Coordinate