The market mechanism may best be defined as
A)The use of market prices and sales to signal desired output.
B)The use of market signals and government directives to select economic outcomes.
C)The process by which the production possibilities curve shifts inward.
D)Price regulation by government.

Question

Quizplus · Accepted Answer

The market mechanism involves the use of market prices and sales to signal desired output. This means that market forces, such as supply and demand, determine what goods and services are produced and in what quantities. Prices act as signals to producers and consumers, indicating what goods are needed or wanted and at what levels. This allows for resources to be allocated efficiently in the economy.

The Market Mechanism May Best Be Defined as