The price rationing mechanism of a freely functioning market leads to the most efficient use of resources because
A) all gains from mutually beneficial trade are captured.
B) the government regulates the market.
C) of the rise of the legislative apparatus that supports trade.
D) the Supreme Court determines market activities.

Question

Quizplus · Accepted Answer

The price rationing mechanism allows for prices to be set based on supply and demand, thereby creating incentives for producers and consumers to make decisions that maximize their own gains. All gains from mutually beneficial trade are captured, meaning that the market can allocate resources efficiently without the need for government intervention or legislative support. The Supreme Court also does not determine market activities, so D is incorrect.

The Price Rationing Mechanism of a Freely Functioning Market Leads