Question

Attempts Average 3. Critical analysis Q3a orice as a rationing method influence the incentives of individuails to supply goods, services, and resources to others 0 when the rationing criterion is price, individuals are encouraged to produce goods and services to generate income. ) Prices act as an incentive for governments, but not individuals OPrices infhuence individuals to produce fixed amounts of goods and services O Prices do not influence individuals to supply goods and services-the only offective aflocation of resources is done thy government GradeN

Answer 1

In a market economy the price mechanism is used to ration goods and services. Individuals supply goods, services and resources to others in order to attain money to buy other goods, services and resources. The higher the price an individual can receive for a good or service they supply, the more incentive they will have to do so.

So, Ans is a) When the rationing criterion is price, individuals are encouraged to produce goods and services to generate income.

In other words,

When price is the rationing criterion, individuals have a strong incentives to provide services to others in exchange for income.