Which of the Following Best Describes the "Guiding Function" of Competitive

Multiple Choice

Which of the following best describes the "guiding function" of competitive prices?

A) Profitable industries tend to contract and unprofitable industries tend to expand.
B) The market system will always generate economic profits for firms which use the least costly production technology.
C) The market system can negotiate reallocations of resources which are appropriate to changes in consumer tastes, technology, and resource supplies.
D) When prices are in equilibrium, product shortages or surpluses cannot occur.