A Friend of Yours Asks You Why Market Prices Are

Multiple Choice

A friend of yours asks you why market prices are better than government-determined prices. What do you say?

A) Because they generally reflect the value of a good to society, but not the cost of making it.
B) Because they generally reflect the cost to society of making a good, but not its value.
C) Because they generally reflect both the value of a good to society and the cost of making it.
D) Because they generally reflect neither the value of a good to society nor the cost of making it.