Prices ration goods to
A) the people who most deserve it.
B) the people with the lowest opportunity cost of time.
C) the people willing and able to pay the highest price.
D) the richest people.

Question

Quizplus · Accepted Answer

Prices are determined by the interaction of supply and demand. The people willing and able to pay the highest price are indicating that the good has a higher value to them, and thus they will pay more for it. This creates an incentive for producers to allocate resources towards producing and selling that good, leading to an efficient allocation of resources.

Prices Ration Goods to