Th1.2: The Signalling Function Flashcards
1
Q
What acts as a signal and where?
A
the price mechanism where resources should be used
2
Q
What happens when prices rise?
A
producers move resources into the manufacture of that product
3
Q
What does the change in price signal to suppliers and consumers?
A
that market conditions have changed so they should change the quantity bought/sold
4
Q
What happens when price equilibrium moves?
A
output equilibrium moves with it
