In a free market, the price of a good is equal to the value of the good:
A) in its next lowest-valued use.
B) in its next highest-valued use.
C) to the highest bidder among those who have satisfied their wants for the good.
D) given the resources used to produce the good.

Question

Quizplus · Accepted Answer

In a free market, the price of a good is determined by the demand and supply of the good. The price of a good will be equal to the value of the good in its next highest-valued use because consumers are willing to pay up to the value they place on the good, and producers will produce up to the point where the marginal cost equals the marginal revenue. This ensures that resources are allocated efficiently to the highest-valued uses.

In a Free Market, the Price of a Good Is