According to the rationing function of prices, a competitive market will:

Question

Quizplus · Accepted Answer

The rationing function of prices states that prices act as a signal for both producers and consumers in the market. If the market is competitive, the equilibrium price will be achieved where the quantity supplied equals the quantity demanded. At this price, shortages and surplus will be eliminated in the market. Therefore, all the options (A, B, C) are correct and the best choice is D, which includes all the options.

According to the Rationing Function of Prices, a Competitive Market