Prices in a market system serve as signals to allocate goods and services efficiently by influencing the decisions of buyers and sellers. They help determine what is produced, how it is produced, and for whom it is produced, thereby addressing the "what," "how," and "for whom" questions in an economy.

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In a Market System

Question 25

Multiple Choice

In a market system:

A) buyers and sellers must be in face-to-face contact with each other.
B) prices serve to allocate goods and services.
C) prices affect the distribution of goods but not the allocation of resources.
D) the "what," "how," and "for whom" questions are not significantly affected.

Correct Answer: