The Market Mechanism

question 149

Multiple Choice

The market mechanism

• A)Is not a very efficient means of communicating consumer demand to the producers of goods and services.
• B)Works through central planning by government.
• C)Eliminates market failures created by government.
• D)Works because prices serve as a means of communication between consumers and producers.

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Definitions:

Total Surplus

The combined total of producer and consumer surplus, indicating the overall net gain for society from producing and consuming a product or service.

Government Imposes

Refers to regulatory actions, taxes, or policy decisions enforced by a government body to regulate social, economic, or environmental practices.

Equilibrium Quantity

The volume of goods or services that are provided and required when the price is at equilibrium.

Effective Price

The final price after considering factors such as discounts, subsidies, or taxes, effectively what is paid or received.