A price system is considered to be efficient when
A) it fails to have the goods that consumers want.
B) an underground market develops.
C) all resources are allocated to the highest-valued uses.
D) firms produce more than what consumers want.

Question

Quizplus · Accepted Answer

An efficient price system ensures that resources are allocated to the highest-valued uses. This means that goods and services are produced and consumed at the most desirable levels, maximizing the overall welfare of society. Choices A and D both describe situations where the price system is not functioning efficiently, and choice B suggests the development of an illegal market, which is not desirable for efficient resource allocation.

A Price System Is Considered to Be Efficient When