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Shortages always raise prices and surpluses always reduce prices until competition produces a price where there are no more surpluses or shortages.

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Q: How does the invisible hand of competition set a market price in market economies?
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Related questions

How does the invisible hand of competition set a market price in a market economy?

b. Shortages always raise prices and surpluses always reduce prices until competition produces a price where there are no more surpluses or shortages. ;D


Market economies have been characterized by?

occasional instability of employment and price levels.


What is competition and how does it affect the market?

competition affects price quality and quantity in grocery store


What markets use price searchers?

imperfect competition market


What are some similarities between market and mixed?

market economies use price mechanism to sove the prolems of economic choce .mixed economies also do the same facilitated by government interventions .


What are the main features of a market economy?

actually there are 6 main features of market economies : * private property * freedom of choice and enterprise * self interest as the dominating motive * competition * a reliance on the price system * a very little role for government ( negligible role for government )


In what kind of market is the price demand the most elastic?

Perfect Competition


Non-price competition tends to be a consequence of which market structure?

Oligopoly


What terms are associated with a market economy?

Free market economy is a free market system in which decisions regarding resource allocation,production, and consumption, and price levels and competition, are made by the collective actions of individuals or organizations seeking their own advantage.In all market economies, however, freedom of the markets is limited and governments intervene occasionally to encourage or dampen demand or to promote competition to thwart the emergence of monopolies. Also called free economy, free market, or free market economy.


Why does this situation seldom happen in market economie?

Competition eliminates shortages and surpluses by setting a market- clearing price.


What is free about a free market?

The free market provides people with the goods they want at the price they are willing to pay. -or- Free-market economies result in a very unequal distribution of wealth.


In what type of market must market price always be equal to marginal cost?

Under perfect competition, since there is no room in perfect competition to earn any abnormal profits