The price mechanism - JAMB Economics 2022 Question
The price mechanism
A
regulates supply and demand
B
rations the consumers
C
rewards the producers
D
allocates scarce resources
correct option: d
Option D is the correct answer.
The price mechanism allocates scarce resources by using market prices to signal the relative scarcity of goods and services. When a good is scarce, the price tends to rise, signaling producers to increase supply and consumers to reduce demand. This process helps to ensure that resources are allocated efficiently to their most valuable uses.
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