price mechanism

Question 1

price mechanism

Answer 1

refers to the interactions between buyers and sellers in the free market in order to allocate resources, determining production and consumption choices.

Question 2

owing to limited resources consumers must…

Answer 2

make choices

Question 3

2 main functions of price mechanism

Answer 3

1. resource allocation

2. rationing of scarce resources

Question 4

incentive

Answer 4

refers to anything that motivates producers or consumers to follow a particular course of action.

Question 5

signaling or resource allocation

Answer 5

forces of demand and supply signify where resources are and arent located

Question 6

rationing function

Answer 6

deters consumers from buying higher priced products

Question 7

consumer surplus

Answer 7

refers to the gain or benefit to buyers who can purchase a product at a price lower than what they are willing and able to pay.

Question 8

consumer surplus equation

Answer 8

wtp-p meaning willingness to pay minus market price

Question 9

true or false consumer surplus is above the equilibrium

Answer 9

true

Question 10

producer surplus

Answer 10

refers to the gain or benefit to firms who receive a price higher than what they are willing and able to supply

Question 11

producer surplus equation

Answer 11

p-wts meaning market price minus willingness to supply

Question 12

producer surplus is below the equilibrium

Answer 12

yas queen

Question 13

social/ community surplus

Answer 13

sum of consumer and producer surplus at a given market price