The price system has information advantages over nonmarket systems only when buyers and sellers can personally communicate their marginal benefits or marginal costs to each other.

Question

Quizplus · Accepted Answer

The price system has information advantages over nonmarket systems even when buyers and sellers cannot personally communicate their marginal benefits or marginal costs to each other. The price system uses the information conveyed by prices to coordinate the actions of buyers and sellers, even if they have limited knowledge about each other's preferences or costs.

The Price System Has Information Advantages Over Nonmarket Systems Only