In a market system,prices
A) signal the relative scarcity of a product.
B) are unfair.
C) are too high.
D) all of the above

Question

Quizplus · Accepted Answer

Prices in a market system serve as signals that indicate the relative scarcity of a product. When a good or service is scarce, its price will increase, signaling to both producers and consumers that more of the product should be produced and/or consumed. Thus, prices play a critical role in the efficient functioning of a market economy. Choices B and C are incorrect because they are not accurate statements about prices in a market system.

In a Market System,prices