Price Mechanism Flashcards
1
Q
What is the price mechanism?
A
Price acts as a signal to buyers and sellers to act. A price mechanism is when the prices of goods or services affect the supply and demand of goods and services. Price mechanism affects both buyers and sellers who negotiate prices.
2
Q
What is equilbrium?
A
- when supply and demand intersect graphically
- when quantity demanded and supply are equal
- buyers are willing to purchase, and sellers are willing to offer
- at equilibrium, there is no tendency to change
