A printing firm can use the same press to produce event programmes or packaging labels. At current market prices, each hour used for packaging labels earns a higher return. The owner therefore assigns more press time to labels, without instructions from an authority. What does this best demonstrate?
Market prices reveal the return from alternative uses and reward the owner for assigning the press to labels
Market prices show that packaging labels have lower production costs than event programmes
Market prices only ration products between buyers, so they do not influence the allocation of press time
Market prices show that packaging labels are more important to society and should receive more press time
75 exam-style questions on OCR GCSE Economics 2.4 Price, covering 2.4.1 Price and distribution of resources, 2.4.2 Equilibrium price and quantity, 2.4.3 Draw the interaction of demand and supply, 2.4.4 Analyse the interaction of demand and supply, 2.4.5 Role of markets in allocating resources, and 2.4.6 Market forces and equilibrium. Each one has a worked solution and a mark scheme showing where the marks go.