Which statement is correct?
A. The operation of a market system has little, if any, effect on the distribution of income in the economy.
B. In a market system, buyers and sellers must be in face-to-face contact with each other.
C. Prices affect the distribution of goods in a market system but not the allocation of resources.
D. In a market system, prices serve to ration goods and services to consumers.
Answer: D
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In equilibrium, if both covered interest parity and uncovered interest parity hold, the expected future spot rate is equal to
A) the current spot rate B) the expected forward rate C) the future spot rate D) the current forward rate
Brad ate four bags of chips at the baseball game. The first bag tasted best, but he found that as he ate more chips the amount of extra satisfaction he was receiving was beginning to fall. This would demonstrate
A) the law of total utility maximization. B) the law of zero utility. C) the law of diminishing marginal utility. D) the law of diminishing costs.