In a market system, which component conveys information about what is relatively scarce and what is relatively abundant?
A)the number of producers
B)the number of consumers
C)prices
D)the amount of government regulation

Question

Quizplus · Accepted Answer

Prices convey information about scarcity and abundance in a market system. Higher prices indicate scarcity, while lower prices indicate abundance. As demand for a product increases and supply remains constant, prices tend to rise, signaling to producers that they should increase production. Conversely, if supply outstrips demand, prices tend to fall, signaling to producers that they should reduce production. Thus, prices play a key role in communicating information about market conditions to producers and consumers.

In a Market System, Which Component Conveys Information About What