Which of the following statements about the price system is most accurate? The price system
A)is automatic and functions perfectly in reallocating economic resources.
B)is automatic,although it does not function perfectly.
C)depends on planned coordination between firms and governments.
D)operates only in a laissez-faire economy.
E)is the only feasible method of allocating resources.

Question

Quizplus · Accepted Answer

While the price system is automatic and does play a role in reallocating economic resources, it is not perfect and there are external factors that can hinder its effectiveness. For example, monopolies or externalities can distort prices and lead to inefficient resource allocation. Therefore, option A is not accurate. Option C may be applicable in some cases, but it is not a necessary condition for the price system to function. Option D is also not accurate as the price system can operate in various types of economic systems. Finally, option E is not completely accurate as there are alternative methods of resource allocation, such as central planning or redistribution policies, though they are generally less efficient than the price system.

Which of the Following Statements About the Price System Is