In markets, information about the relative value of resources is communicated through:
A)government agencies.
B)planning committees.
C)prices.
D)unions.
E)cartels.

Question

Quizplus · Accepted Answer

Prices serve as a signal to buyers and sellers of resources about the relative scarcity and demand for those resources. As demand increases and supply decreases, prices rise, indicating that resources are becoming relatively more valuable. Conversely, if demand falls and supply increases, prices fall, indicating that resources are becoming relatively less valuable. Government agencies, planning committees, unions, and cartels have their own agendas and may distort or manipulate resource allocation in ways that do not reflect true market values.

In Markets, Information About the Relative Value of Resources Is