Question

many buyers and sellers participate in the rice market. All their decisions in the rice market lead to the market equilibrium price. This describes which function of price?-A price creates incentives-B price provides signals-C price leads to inventions-D price aggregates information

Answer 1

The function of price that describes the situation in which many buyers and sellers participate in the rice market, with their decisions leading to the market equilibrium price, is price provides signals.

Step-by-step explanation:

The function of price that describes the situation in which many buyers and sellers participate in the rice market, with their decisions leading to the market equilibrium price, is B) price provides signals. Prices serve as signals in the market economy, conveying information about the relationship between demand and supply to buyers and sellers. In the case of the rice market, the price signals to buyers and sellers whether the market is in surplus or shortage, leading them to adjust their behavior accordingly.

Answer 2

The function of price that describes how many buyers and sellers interact to reach the market equilibrium in the rice market, where price collects and shares essential market information, is that it aggregates information.

Step-by-step explanation:

The many buyers and sellers participating in the rice market, and their decisions leading to the market equilibrium price, exemplify the function of price where it aggregates information. Prices in a market serve as a social mechanism for collecting, combining, and transmitting relevant information, such as the relationship between demand and supply, and then act as messengers to convey that information to both buyers and sellers. For the rice market to reach equilibrium, there must be a full dissemination of information regarding product prices and quality. Without this information, transactions may fail or result in less-than-optimal outcomes.