Exam Extras Flashcards
1
Q
Price Mechanism
A
Refers to the way changing market conditions and the resulting movement in relative prices coordinate the way resources are allocated within the economy
2
Q
Relative Prices
A
The price of one g+s divided by or in comparison to the price of another g+s. Changes in relative prices send clear signals to producers and consumers and determine where resources will be allocated in the economy.
