The function of price in a market economy is to
A)make producers wealthy at the expense of consumers.
B)provide information to producers and consumers.
C)provide a base on which government can build a tax system.
D)prevent market adjustment from being necessary.
E)cause consumers to be certain that they desire a product before they buy it.

Question

Quizplus · Accepted Answer

The function of price in a market economy is to provide information to producers and consumers. Prices convey information about the scarcity of resources, the preferences of consumers, and the costs of production. Producers use this information to decide what and how much to produce, while consumers use it to decide what and how much to buy.

The Function of Price in a Market Economy Is to