Final answer:
The decisions of households and businesses are coordinated by markets and prices, which allocate resources efficiently in a modern economy without the need for a central planner.
Step-by-step explanation:
The millions of decisions made by households and businesses are highly coordinated with one another by markets and prices. In a modern economy, these two factors work in tandem to efficiently allocate resources, goods, and services. Organizations and individuals rely on the pricing system to make informed decisions about what to produce, how much to produce, and for whom to produce.
Through this mechanism, markets naturally adjust to the collective demands and the relative scarcity of resources without needing a central planner. For example, if consumers demand more televisions, the price of televisions may rise, signaling producers to create more, and perhaps enticing workers to join the electronics industry due to higher wages or better job prospects. Meanwhile, prices that fall can indicate an oversupply or decreased demand, pushing resources to adjust accordingly.