When prices are used as a signalling system between firms and households concerning the use of resources, price mechanism is concerned with:

Okay Mot, let's tackle these economics questions.

Question 1:
When prices act as a signalling system for resource use, the price mechanism is concerned with how those resources are distributed.
The correct option is D.
The price mechanism is the system where prices are set by supply and demand, guiding producers and consumers on how to allocate resources efficiently.

Question 2:
The process where supply and demand interact to determine prices is a fundamental concept in economics.
The correct option is D.
The price mechanism describes how the forces of supply and demand work together to establish equilibrium prices and quantities in a market economy.

Question 3:
The theory of demand states an inverse relationship between price and quantity demanded, assuming all other factors are constant (ceteris paribus).
The correct option is D.
An inverse relationship means that when the price increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases. They move in opposite directions.