The Market Mechanism

question 118

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. Buyers choose how much to buy based on price; profitability and therefore production are driven by prices.

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Definitions:

Disclosed

Information that has been made known or revealed, typically referring to facts that were previously private or confidential.

Expenses

The costs incurred in the process of generating revenue, including costs like rent, utilities, payroll, and materials.

Assets

Resources owned by a company from which future economic benefits are expected to flow to the entity, including cash, inventory, and property.

Liabilities

Financial obligations or debts that a business owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.