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Price plays a key role in efficient allocation of resources. It plays a key role in persuading both the suppliers and the consumers, looking in to the market demand with the price factor creating the incentive for the buyers to buy, suppliers feel confident in a better tradeoff between the possible production combinations which is actually a rational policy to be followed both for the efficient distribution and profit maximization.
It avoids from economic shrinking as suppliers would look for optimal production possibility and would produce and allocate as much demanded in the market.
What else can I help you with?
What is the role of prices in allocating resources in a market economy?
This is from P.47 . right ?
What are the advantages and disadvantages of allocating resources through the public sector?
The advantage of allocating resources in the public sector is that resources can be produced based on demographic needs. The disadvantage of allocating resources is that there is room for corruption if the wrong individuals are chosen.
Why allocating resources without prices is difficult?
When resources are made available at no cost, people become greedy. Charging a price gives people a selfish motive to restrain their greed.
How do prices help allocate resources between markets?
Prices help allocate resources between markets by serving as signals that indicate the relative scarcity or abundance of goods and services. When prices rise, it signals that a particular resource is in high demand and encourages producers to allocate more resources towards producing that good or service. Conversely, when prices fall, it signals that a resource is less in demand and may prompt producers to reallocate resources to other markets where they can earn higher profits. In this way, prices play a crucial role in efficiently allocating resources across different markets based on consumer preferences and market conditions.
Discuss the shortcomings of the market in allocating resources?
"Discuss the shortcomings of the market in allocating resources?" how the intervention of gov will attempt to correct the maket shortcoming?
Is a structure for allocating scare resources?
An Economic system
What is a structure for allocating scarce resources.?
An economic plan
Is a structure for allocating scarce resources?
An economic plan
Advantage and disadvantage of trying to plan and predict what people will demand and allocating a country's resources on that basis?
Advantage and disadvantage of trying to plan and predict what people will demand and allocating a country's resources on that basis?
Economics is about allocating resources to produce and distribute which of the following?
Goods and services
What does Economics do with resources when it comes to the production and distribution of goods and services?
Allocating
What does economic do with resources when it comes to the production and distribution of goods and services?
Allocating
