The price mechanism solves the "for whom" problem by assigning high prices to goods in high demand and letting customers choose whether to purchase them.

Question

Quizplus · Accepted Answer

The statement is correct. The price mechanism, through the interaction of supply and demand, signals to consumers the relative scarcity of goods and services, and allows them to make decisions about how to allocate their income. High prices indicate high demand which, in turn, encourages producers to increase supply, helping to ensure that the goods and services are distributed to those who value them the most.

The Price Mechanism Solves the "For Whom" Problem by Assigning