Price mechanism

  • Created by: ann2000
  • Created on: 24-02-18 13:15

Definition -- referes to the system where the forces of demand and supply determine the price of commodites 

-it is the buyers and sellers who acctually determine the price of the commodity 

Explaining the rationing function of price 

definition- Where there is a shortage of a product= prices will rise and deter some consumers from buying the producy 

- the rise in price-- only leaves the consumers that are willing and able to buy

-market price acts as rationing device 

-higher prices -- discourage demand and conserve resources 

- the larger the scarcity the higher the…


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