The Price Mechanism

Market failures such as externalities, merit and demerit goods, and public goods can disrupt the allocation of resources through the price mechanism.

True

False

The rationing function of the price mechanism allows consumers to purchase a product regardless of their willingness to pay.

True

False

Introducing a payment for blood donation could potentially reduce the number of people coming forward.

True

False

Lower prices discourage consumers from increasing their quantity demanded.

True

False

The price mechanism has no role in allocating resources in a market economy.

True

False