Role of price in market economies
What is the role of price in market economies?
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Prices play a very important role in market economies since they bring markets into equilibrium. When the price is distinct from its equilibrium level, the quantity supplied and quantity demanded are not equivalent. The resultant surplus or scarcity leads suppliers to adjust the price till equilibrium is restored. The prices therefore serve as signals which guide economic decisions and assign scarce resources.
planned investment. planned saving. the difference between planned saving and actual saving. the difference between planned investment and actual saving.
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