price mechanism Flashcards
1
Q
what does
excess demand
do
A
puts upwards pressure on prices. As QD increases, firms are going to see long ques and waiting lists of people
2
Q
A
4
A
allocatate reasources efficiently at equillibrium
3
Q
s
1
A
higher prices signals that there is excess demand for consumers and producers and a need for more resources
4
Q
r
3
A
ration resources by discouraging consumption.
shown by a contraction along demand curve
5
Q
i
2
A
insentive for firms to increase output to increase profit.
shown as an extention along supply curve
