The price ... moves markets into equilibrium. Scarce resources are allocated, price signals are given to consumers, price changes as a result in equilibrium change and a higher price would provide incentives to firms to produce more
Mechanism
1 of 5
Functions of the price ... include rationing, incentives and signalling
Mechanism
2 of 5
Price mechanism function: Price will act as a ... mechanism as a higher price will ... to producers that they could make more profits but also ... and discourages consumers from demanding the product
Signalling
3 of 5
Price mechanism function: If a product or service is scarce, a higher price will ... it. As demand rises for a popular product or as supply runs out, a shortage will bring a ... function into play
Rationing
4 of 5
Price mechanism function: A rising price provides a greater ... to produce
Incentive
5 of 5
Other cards in this set
Card 2
Front
Functions of the price ... include rationing, incentives and signalling
Back
Mechanism
Card 3
Front
Price mechanism function: Price will act as a ... mechanism as a higher price will ... to producers that they could make more profits but also ... and discourages consumers from demanding the product
Back
Card 4
Front
Price mechanism function: If a product or service is scarce, a higher price will ... it. As demand rises for a popular product or as supply runs out, a shortage will bring a ... function into play
Back
Card 5
Front
Price mechanism function: A rising price provides a greater ... to produce
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