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How do prices act as signals to allocated goods, services, and productive resources in a market economy?


High prices act as an incentive to drive demand higher.

B) Low prices act as an incentive for producers to increase inventories.

C) Low prices act as an incentive to drive consumers to substitute goods and services.

D) High prices act as an incentive to increase the supply of a good, service or productive resource.

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Answer:

Answer is D. high prices act as an incentive to increase the supply of a good , service or productive resource.

Explanation:

The market economy  can be described or explained as the system where the production of goods and services are been directed or controlled by the laws of demand and supply.

This system is very considered as important , because it explained that businesses with fewer cost are more competitive and will surely make more money when compared with businesses with high cost.

This means that prices are the signal or determinant factor of goods, services and productive resource in a market economy.

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