The most fundamental function of prices in a market economy is to provide
A)The data necessary to calculate rates of inflation.
B)The basis for the calculation of sales tax.
C)Information about the relative scarcities of resources and goods and services.
D)Maximum profits to producers.

Question

Quizplus · Accepted Answer

Prices in a market economy provide information about the relative scarcities of resources and goods and services. This information guides consumers and producers on what to produce, how much to produce, and at what price. It also helps allocate resources efficiently and effectively within the economy. The other choices do not accurately describe the most fundamental function of prices in a market economy.

The Most Fundamental Function of Prices in a Market Economy