The classical and neoclassical thesis according to which, in a perfectly competitive economy and in the absence of externalities, market forces operating through the price mechanism assure an optimum allocation of resources, statically and dynamically, were open to attack at three points. First, prices may give the wrong signals because they are distorted by monopoly or other influences. Secondly, labor and other factors of production may respond to price signals inadequately or even perversely. Thirdly, although ready to respond appropriately to price signals, factors of production may be immobile, unable to move quickly if at all. Lets us call them the ‘signaling’, ‘response’ and ‘mobility’ components of the mechanism.

According to the text,

Item 4 - the ‘signaling’ component designates the distorting effect which monopolies have over prices