Citizens of Cappaconia love to wear fancy hats Competing des

Citizens of Cappaconia love to wear fancy hats. Competing designers sell their hats online, where they can easily monitor the sales of their goods along with the prices they receive This best exemplifies how a market system performs which coordination task required in the economy? How to distribute output Which of the possible combinations of goods to produce How to use resources efficiently

Solution

A price driven system is where market forces of demand and supply interact and behave in mutually dependent way so that productive and allocative efficiency is ensured. In such a case, there are no discrepancies in the market and total surplus is maximum.  

Here the question talks about allocative efficiency where the firms are able to distribute the resources effectively. Its not the usage as production is not discussed but it is the distribution of resources that is significant for consumers

Select How to distribute output.