In a marketplace,prices ________.
A) are determined through auctions
B) are determined by politicians and regulators
C) act as incentives that allow for the efficient allocation of resources
D) act as a measure of value and do not affect the allocation of resources

Question

Quizplus · Accepted Answer

Prices act as incentives for buyers and sellers, encouraging them to allocate resources efficiently in the marketplace. Prices that are too high encourage buyers to look for substitutes, while prices that are too low encourage sellers to reduce production. Therefore, prices play a crucial role in the functioning of markets and help to allocate resources effectively. Options A and B are not relevant to the determination of prices in most markets, while option D is incorrect because prices do affect the allocation of resources in the marketplace.

In a Marketplace,prices ________