The Price System

question 162

Multiple Choice

The price system

• A)sends signals to producers.
• B)sends signals to consumers.
• C)is based on supply and demand.
• D)All of the choices are true about the price system.

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Definitions:

Actual Price

The price at which goods are sold in the market, not necessarily equal to the listed or expected price.

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often justifying government intervention.

Overproduction

A situation where more goods are produced than can be sold, often leading to excess inventory and potential economic inefficiencies.

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive.