In a Price System, Changes in Prices

question 88

Multiple Choice

In a price system, changes in prices

• A) make it difficult for the system to function well.
• B) imply that people have made mistakes in the past.
• C) signal to everyone in the system what goods are relatively more or less scarce.
• D) signal to policy makers what goods should and should not be taxed more.

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Definitions:

Assets

Resources owned or controlled by a business, expected to produce benefits or economic value in the future.

Liabilities

The financial obligations of a business entity, including debts and other amounts owed to creditors.

Equity

The remaining stake in a company's assets once liabilities are subtracted, signifying the equity held by shareholders.

Accounting Equation

A fundamental financial principle represented as Assets = Liabilities + Owners' Equity, showing the relationship between a company's resources and its sources of financing.