free market definitions Flashcards
1
Q
signalling
A
Prices adjust to demonstrate where resources are required, and where they are not
2
Q
rationing
A
Prices serve to ration scarce resources when demand in a market outstrips supply.
3
Q
incentive
A
Through their choices consumers send information to producers about the changing nature of needs and wants
4
Q
price mechanism
A
The interaction of buyers and sellers in free markets enables goods, services, and resources to be allocated prices.
