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

Question 20

Multiple Choice

Which of the following best describes the "guiding function" of price?


A) In response to a surplus or shortage in two markets,price serves as a "guiding function" by decreasing in one market and increasing in the other market in the short run.
B) The guiding function of price is the movement of resources into or out of markets in response to a change in the equilibrium price of a good or service.
C) The guiding function of price occurs when the market price changes to eliminate the imbalance between supply and demand caused by a shortage or surplus at the original price.
D) The guiding function usually occurs in the short run while the rationing function usually occurs in the long run.

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