Question

Producers will __________ the available resources when a change in price, and thus, a change in the profit, occurs.

• A. reallocate
• B. rearrange
• C. return
• D. arrange

Answer 1

Answer: (A)

reallocate

In Price mechanism price directs the flow of goods and services in the market as it directs the supply by the production sector i.e supply will increase if price increases and vice-versa and the demand sector i.e demand will increase if price decreases and vice-versa. Therefore if there is any changes in the price, the available resource also changes which is reflected inthe profit margin.