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Question

Question
Price is functioning as a message when it: is a line of communication between buyers and sellers in a market. creates incentives for changes in production and consumption. broadcasts useful information. summarizes all that is happening in the market.

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Quentin

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Step 1/2

Answer:- Option A is correct. Price functions as a message when it serves as a line of communication between buyers and sellers in a market. This communication is essential for the efficient functioning of a market economy.

Explanation:

Price serves as a message because it conveys information about the supply and demand conditions in a market. When the price of a product or service rises, it signals to producers that there is increased demand, which may encourage them to produce more of that item to capitalize on higher profits. Conversely, when prices fall, it signals reduced demand, prompting producers to adjust their production levels accordingly.

Explanation:

Moreover, consumers also receive a message from prices. When prices are high, consumers may decide to buy less or seek alternative products, whereas lower prices may encourage greater consumption. In this way, price acts as a messenger between buyers and sellers, facilitating the allocation of resources in the economy.

Step 2/2

Now, let's briefly explain why the other options are incorrect:

Explanation:

B) Price does create incentives for changes in production and consumption, but this doesn't make it a message in itself. It's more about the economic consequences of price changes.

Explanation:

C) While prices can broadcast useful information, this is a consequence of their role as a message rather than the primary function.

Explanation:

D) Price does summarize market conditions, but again, this is a result of its role as a message, not its main purpose.

Explanation:

In summary, price functions as a message primarily when it serves as a communication channel between buyers and sellers, conveying information about supply and demand conditions in a market. This communication is essential for coordinating economic activities in a market economy.

Final Answer

Answer:- The correct option is A) Price is a line of communication between buyers and sellers in a market.

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