Which statement explains why many economists have often compared the functioning of worldwide markets to the functioning of a computer?
A) Worldwide markets can allocate resources randomly just as a computer can generate random data.
B) Without the use of computers, markets cannot solve the information problem of resource use.
C) Without the use of computers, markets cannot solve the allocation problem of resource use.
D) Worldwide markets can solve very large resource-allocation problems by simply using the price signal mechanism.

Question

Quizplus · Accepted Answer

Worldwide markets use the price signal mechanism to allocate resources efficiently, which can be compared to how a computer solves large problems by breaking them down into small steps. Therefore, option D is the correct choice. Option A is incorrect because markets do not allocate resources randomly. Option B is incorrect because markets existed long before computers and solved the information problem through various means such as prices, competition, and supply and demand. Option C is incorrect because the allocation problem is solved by the price mechanism, not computers.

Which Statement Explains Why Many Economists Have Often Compared the Functioning