Which of the following functions is not performed by prices in a free market?
A)guiding the allocation of resources
B)conveying information about the marginal cost of production
C)making the distribution of income more equitable
D)replacing the need for governmental supervision of production

Question

Which of the following functions is not performed by prices in a free market?
A)guiding the allocation of resources 
B)conveying information about the marginal cost of production 
C)making the distribution of income more equitable 
D)replacing the need for governmental supervision of production

Quizplus · Accepted Answer

Prices in a free market do not necessarily make the distribution of income more equitable. In fact, they can often exacerbate income inequality by allowing those with more resources to purchase more goods and services at higher prices, while those with fewer resources struggle to afford even basic necessities. The other functions listed (guiding the allocation of resources, conveying information about marginal cost, and replacing the need for governmental supervision of production) are all key roles that prices play in a free market system.

Which of the Following Functions Is Not Performed by Prices