The Role of Prices Flashcards
1
Q
what do consumers determine
A
how much and what will be produced through what they are willing to spend their money on
2
Q
what do producers determine
A
how to produce something, they look for the most efficient and cheap option
3
Q
what does price determine
A
who is willing to spend that and buy it
4
Q
how is the reward of production determined
A
by how much the market is willing to pay for resources. The reward reflects scarcity of resources (natural, capital and labour)
