In Its Most Ideal Form, a Price System Allows

question 132

Multiple Choice

In its most ideal form, a price system allows

• A) firms to act in such a way that they eliminate scarcity.
• B) consumers to satisfy all their wants.
• C) resources to move from lower-valued uses to higher-valued uses through voluntary exchange.
• D) government policy makers to allocate resources to the uses which they consider to be in the best interests of society.

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Definitions:

Disposable Income

Discretionary financial resources available to households for spending and saving after tax.

Consumption

The consumption of products and services by families, which adds to the total demand within the economic system.

45-Degree Line

In economics, a graphical representation where all points on the line represent where the value of the goods and services produced equals total spending.

Dissaving

The consumption of funds beyond current income, often leading to the depletion of wealth or the incurrence of debt.