Markets allocate resources _______ when the _______ confronts decision makers with the ________ and _______ of their decisions.

Question

Quizplus · Accepted Answer

Markets allocate resources efficiently when decision makers are confronted with the costs and benefits of their decisions through the price system. This allows for resources to be directed to their most valuable uses and for production to occur at the lowest possible cost, leading to economic efficiency. Inefficient allocation of resources occurs when decision makers are not fully informed of the costs and benefits of their decisions or when externalities are present. Option A and B both suggest that markets allocate resources inefficiently, whereas option D uses an unclear term "business system" instead of price system.

Markets Allocate Resources _______ When the _______ Confronts Decision Makers

Markets Allocate Resources _ When the _ Confronts Decision Makers