--%>
Assignment Help - homework help

Role of price in market economies

What is the role of price in market economies?

E

Expert

Verified

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.

   Related Questions in Macroeconomics

  • Q : Physical quality of life index DISCUSS

    DISCUSS the experience of high GNP countries and low GNP with regard to PQLI.

    		•
  • Q : Fiscal measures to accurate

    Describe the fiscal measures to accurate the condition of deficient demand and excess demand. Answer: Fiscal measures are the government’s budgetary policy th

    		•
  • Q : Illustration of arbitrage The

    The illustration of arbitrage takes place when: (1) Enterprising students purchase used textbooks much cheaply on E-Bay and sell them to another students at lower prices than bookstore charges. (2) Ivan purchases a stock when it is cheap and sells it

    		•
  • Q : Market Supply versus Individual Supply

    What is the basic difference between Market Supply and Individual Supply?

    		•
  • Q : How Bank rates control the credit How

    How Bank rates control the credit? Answer: Bank rate is the rate of interest at which the Central bank lends to Commercial banks. By increasing the bank rate centra

    		•
  • Q : Functions of central bank Describe

    Describe functions of central bank? Answer: (A) Issue of currency: Central bank is the only authority for the issue of currency

    		•
  • Q : Interest receipt Why is interest

    Why is interest received classified as revenue receipt? Answer: Interest received is a revenue receipt since it does not build any liability nor it leads to the red

    		•
  • Q : Difficulty of scarcity People in whole

    People in whole the world confront the difficulty of scarcity at always because: (i) restricted resources and times preclude producing all the goods people need. (ii) greedy capitalist monopolies charge excessively high prices. (iii) international mar

    		•
  • Q : Impact on income due to price of excess

    What is the impact on income or output and price of excess demand (Inflationary gap)? Answer: In the condition of excess demand (that is Inflationary gap) there wil

    		•
  • Q : MPC What relationship does the MPC bear

    What relationship does the MPC bear to the size of the multiplier? The MPS? What will the multiplier be when the MPS is 0, .4, .6, and 1

    		•