Th1.2: Price Mechanism in National Markets Flashcards
1
Q
Why will house prices in London rise through the rationing function?
A
There is excess demand, given London is the capital and the second largest financial centre in the world - more jobs there
2
Q
What does a rise in house prices act as an incentive function?
A
act as incentive for firms to allocate resources to the production of more houses, as there is profit to be made
