Markets have the advantage over central planning as the method of resource allocation because:
A) resources travel to their highest-value uses.
B) resources are allocated equally across all uses.
C) resources are distributed to those goods that have a larger number of substitutes.
D) central planners have never been shown to correctly identify high-value uses of products.

Question

Quizplus · Accepted Answer

Markets allow resources to flow to their highest-value uses through the price mechanism, which incentivizes producers to allocate resources where demand is highest. Central planning, on the other hand, relies on predetermined targets and quotas set by authorities who may not have as accurate information about consumer preferences and needs.

Markets Have the Advantage Over Central Planning as the Method