Which of the Following Statements About Markets and Prices Is

question 12

Multiple Choice

Which of the following statements about markets and prices is correct?

• A) In a market system, buyers and sellers must be in face-to-face contact with each other.
• B) Prices affect the distribution of goods in a market system, but not the allocation of resources.
• C) In a market system, prices serve to ration goods and services to consumers.
• D) The operation of a market system has little, if any, effect on the distribution of income in the economy.

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Definitions:

Equilibrium Quantity

Supply and demand volume of goods or services at the price where equilibrium is achieved.

Market Price

The current price at which a good or service can be bought or sold in a marketplace, determined by supply and demand forces.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to market equilibrium.

Quantity Supplied

The total amount of a particular good or service that producers are willing to provide at a given price.