Which statement is correct?Multiple ChoiceThe operation of a market system has little, if any, effect on the distribution of income in the economy.In a market system, buyers and sellers must be in face-to-face contact with each other.In a market system, prices serve to ration goods and services to consumers.Prices affect the distribution of goods in a market system but not the allocation of resources.
Question
Which statement is correct?Multiple ChoiceThe operation of a market system has little, if any, effect on the distribution of income in the economy.In a market system, buyers and sellers must be in face-to-face contact with each other.In a market system, prices serve to ration goods and services to consumers.Prices affect the distribution of goods in a market system but not the allocation of resources.
Solution
The correct statement is: "In a market system, prices serve to ration goods and services to consumers."
This is because in a market system, prices are used as signals to distribute resources. If a good or service is in high demand, its price will rise, which will incentivize producers to produce more of it. Conversely, if a good or service is in low demand, its price will fall, which will discourage producers from producing it. This is how resources are allocated in a market system.
The other statements are incorrect. The operation of a market system does have an effect on the distribution of income in the economy. Buyers and sellers do not need to be in face-to-face contact with each other in a market system, thanks to technology and various forms of trade. Prices do affect the allocation of resources in a market system, as explained above.
Similar Questions
The allocation of resources in a market economy is described by which of the following statements?The government decides which goods will be produced and which consumers will receive them.Buyers and sellers exchange goods and services on a voluntary basis.Prices and costs help producers decide whether they are producing too little or too much of a good. aI only bII only cIII only dI and III only. eII and III only.
Multiple Choice QuestionThe following statement is true about what type of market: the lower price accompanying each increase in output (total product) applies not only to the marginal product of each successive worker but also to all prior output units that otherwise could have been sold at a higher price.Multiple choice question.A perfectly competitive marketA free marketAn imperfectly competitive market
Which of the following is something that markets cannot do?multiple choiceDetermine the equilibrium quantity of a good or serviceProvide unlimited goods and servicesDetermine the equilibrium price of a good or serviceMake buyers and sellers better off
In the market system, the statement of "Wages, interest, rent, and profit are crucial determinants of the size of each person's income." is an indication of:Multiple ChoiceWho will get the output?How will the system accommodate change?What will be produced?How will the goods and services be produced?
Multiple Choice QuestionHow is the market supply of a good or service calculated?Multiple choice question.By summing the quantity produced by all sellers at every price within the marketBy summing the price of each unit of output for all sellers within the marketBy summing the total revenue and subtracting the total costs of productionBy summing the cost of production for all sellers within the market
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.