Which of the following statements about markets and prices is correct?

A) In a market system, buyers and sellers must be in face-to-face contact with each other.
B) Prices affect the distribution of goods in a market system, but not the allocation of resources.
C) In a market system, prices serve to ration goods and services to consumers.
D) The operation of a market system has little, if any, effect on the distribution of income in the economy.

Question

Nicole Riebel · Accepted Answer

Final Answer : C, Explanation :  In a market system, prices serve to allocate resources by directing them to where they are most valued and rationing goods and services to consumers based on their willingness and ability to pay. Prices also play a role in determining the distribution of income by influencing the wages and profits received by different factors of production. Therefore, option C is the correct statement.

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