2.4 Price

Question 1

Price Definition:

Answer 1

The sum of money required to pay for a good or service determined by an interaction beween demand and supply

Question 2

Equilibirum Price

Answer 2

The price at which quantity demanded is equal to quantity supplied for consumers and producers

Question 3

Disequilibrium

Answer 3

• Supply is greater or less than demand

Question 4

How do Prices help determine efficient use of resources

Answer 4

• Signalling (price changes show where resources are needed)
• Transmission of preferences (show what consumers prefer now)
• Rationing (when demand far oustrips supply only those with the means and willingnesss can afford the product)

Question 5

Price Elasticity Revenue Effect

Answer 5

PED TABLE:
Price Elastic Demand: (revenue up if price decreases)
Price Inelastic Demand ( Revenue up if price increases)