Price Mechanism (CH11) Flashcards
1
Q
Signalling (1)
A
Price signal to consumers and producers that they should change their consumption/ production levels
2
Q
Incentives (2)
A
Price encourages consumer and producers to change their behaviour
3
Q
Rationing (3)
A
When resources are scarce, price increases which discourage demand and rations resources. Only those that can afford will pay