Question

Identify the functions of price mechanism in a market economy.

• A. Coordination of economic decisions.
• B. Allocation of resources in the economy.
• C. Determination of factor incomes.
• D. All of the above.

Answer 1

The correct option is D All of the above.

Functions of price mechanism in a market economy are :-

a) Coordination of economic decisions.b) Allocation of resources in the economy.

c) Determination of factor incomes.

Price mechanism can be defined as a process of determining the price of goods and services in the market using demand and supply forces.