13. Which of the following statements is correct? According to Friedrich Hayek:

Question

13. Which of the following statements is correct? According to Friedrich Hayek: Select one answer a. Prices convey the scarcity of a good under a centrally planned economy b. Perfect competition can be attained without activities such as advertising, c. The advantage of capitalism is that it provides the right information to the d. A single central authority can collate and make use of the information undercutting, and improving ("differentiating") the goods or services produced right people. available in the economy better than the market. 14. The following diagram depicts the comnetitive mnn

Explanation / Answer

c) is the right answer

Hayek is against all forms of centralization as mentioned in a) and d).

On advertising he was of the view that advertising creates information. Without information there can be no perfect competition. Thus, advertising helps in creating perfect competition.

c) is Hayek views regarding flow of information in the market. That market communicates the prices to prospective buyers and sellers.

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