Market Forces Flashcards
1
Q
What does Incentive functions affect?
A
Supply
2
Q
What does Rationing functions affect?
A
Demand
3
Q
What do Signalling functions affect?
A
Supply + Demand
4
Q
Incentive Function Effect
A
Profit incentive to encourage supply.
5
Q
Rationing Function Effect
A
Higher prices cause some consumers to avoid purchasing the product.
6
Q
Signalling Function Effect
A
Price signals to both producers and consumers.
