how markets work
- Created by: Sophie.ellenx
- Created on: 11-04-21 09:41
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- How Markets Work 1
- rational decision making
- consumers aim to maximise utility - satisfaction gained from consuming a product
- firms aim to maximise profits - keep shareholders happy
- price mechanism
- incentive function - incentive to work hard or what to buy
- signalling function - signal where resources should be used
- rationing function - rationing goods when price increases, the limited resources will be rationed and allocated to those who can afford them/ value them most highly
- signalling function - signal where resources should be used
- incentive function - incentive to work hard or what to buy
- rational decision making
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