Factors Of Supply And Demand Flashcards
1
Q
4 main functions of price mechanism
A
Allocate, rationing, signalling, insensitives
2
Q
Allocating
A
Allocating scarce resources among competing users
3
Q
Rationing
A
Prices serve to ration scarce resources when market demand outstrips supply
4
Q
Signalling
A
Prices adjust to demonstrate when recourses are required and when they aren’t, eg sunglasses price go up in the summer
5
Q
Incentives
A
When the price of a product rises, quantity supplied by resources does aswell
