In a market system, the mechanism that coordinates economic activity is
A)the profit motive.
B)the price system.
C)input-output analysis.
D)program trading in the stock market.

Question

Quizplus · Accepted Answer

The price system, also known as the market system, coordinates economic activity by signaling the exchange of goods and services between buyers and sellers through prices determined by supply and demand in the market. It helps allocate resources efficiently by providing information to producers and consumers about the scarcity of goods and services and the costs of producing them. The profit motive is a key incentive for economic agents in the market system, but it is not the main mechanism that coordinates economic activity. Input-output analysis is a tool used to study the interdependence of industries in an economy, but it is not a mechanism for coordinating economic activity in the market system. Program trading in the stock market refers to the use of computer algorithms to execute large trades quickly, but it is not a mechanism for coordinating economic activity in the broader economy.

In a Market System, the Mechanism That Coordinates Economic Activity