The Text States: "The Great Economic Problem Is to Arrange

question 219

Multiple Choice

The text states: "The great economic problem is to arrange our limited resources to satisfy as many of our wants as possible." How does a market achieve this goal?

• A) It chooses central planners who are experts at identifying the best uses of resources.
• B) The forces of demand and supply use prices as a signaling device that directs resources to their highest-value uses.
• C) It ensures that prices provide an even signal by making sure prices across all markets are equal.
• D) It offers resource-based futures contracts.

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Definitions:

Price Elasticity

A measure of how much the demand for a product changes in response to a change in price, indicating the sensitivity of consumers to price changes.

Product Differentiation

The process through which companies distinguish their products or services from those of competitors, through attributes like quality, design, or branding.

Competitors

Companies or entities that are in the same industry and compete against each other for market share by offering similar products or services.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers, typically downward sloping.