Question

Which of the following is not a function of prices in a market system? Group of answer choices Prices send signals to buyers and sellers to help them make rational economic decisions. Prices ensure an equal distribution of goods and services among consumers. Prices coordinate economic activity. Prices have the crucial job of balancing supply and demand.

Answer 1

Prices ensure an equal distribution of goods and services among consumers.

Step-by-step explanation:

The price mechanism helps in the efficient allocation of resources. There are a number of functions performed by the price mechanism. Prices send signals regarding resources. An increase and decrease in prices reflect surplus and deficit.

Price balances the demand and supply of a product. Price is inversely related to demand and positively related to the supply of a product. It is determined by the interaction of demand and supply and helps in balancing supply and demand.

For instance, an increase in demand would increase the price, this higher price will motivate the suppliers to increase quantity supplied thus balancing demand and supply.

Price helps in coordinating economic activities and helps buyers and sellers in decision making. However, they do not help in equal distribution of goods and services among consumers.