In a market economy price serves to

Question

Quizplus · Accepted Answer

In a market economy, price serves as the mechanism to allocate goods. This means that prices help determine how much of a good or service is produced and how much it is sold for. When the price of a good or service is high, producers are incentivized to produce more of it because they can make greater profits. Conversely, when the price is low, consumers are incentivized to purchase more of it because they can get a good deal. The balance of supply and demand helps ensure that the market efficiently allocates resources to their most valued uses.

In a Market Economy Price Serves to