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Unformatted text preview: owners in the
market, producers recognize this trend as well and
decrease production accordingly.
In summary, the action of consumers voting with their
dollars in the market by responding to product and
service prices communicates production information
clearly without the need for additional information
exchange. 10 Chapter 2: The Market System and The Circular Flow
25 What resources will we use
to produce our goods?
The market process and price also automatically
answer this question for us in that producers are
prompted to use the least-cost combination of input
resources in order to assure themselves of
Therefore, producers maximize profits in that they
seek out the resource combination with the lowest
cost and as such the price of resources indirectly
answers this question automatically as well.
Chapter 2 25 Learning Objective 2-3 Slide
26 What resources will we use to produce our goods?
Market systems have the capacity to address this
question and come to an efficient resolution
automatically as well.
Producers recognize that controlling cost of pr...
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- Spring '09