The Function of Price in a Market Economy Is to

question 126

Multiple Choice

The function of price in a market economy is to

• A)make producers wealthy at the expense of consumers.
• B)provide information to producers and consumers.
• C)provide a base on which government can build a tax system.
• D)prevent market adjustment from being necessary.
• E)cause consumers to be certain that they desire a product before they buy it.

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Definitions:

Hypothetical Data

Data or information that is assumed or simulated for the purpose of analysis or discussion.

Surplus

A situation in which the quantity supplied of a good exceeds the quantity demanded at the current price, often leading to a price decrease.

Deficit

The financial situation in which expenditures exceed revenues over a specified period, leading to borrowing or depletion of funds.