In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.

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In a market economy, prices not only help determine the distribution of goods and services but also the allocation of resources. Resources are allocated to the production of goods and services that are in demand and can fetch higher prices. Higher prices indicate that resources should be allocated towards the production of those goods and services, whereas lower prices suggest that resources should be allocated towards other products. Therefore, the price system plays a crucial role in determining the allocation of resources in a market economy.

In a Market Economy, Prices Help Determine the Distribution of Goods