I'm sure inflation has a big role but im not sure please help.
2006-08-01 23:16:15 · 4 answers · asked by lowrider122002 2 in Social Science ➔ Economics
Price has the most central roles in a market economy. It is the determinant demand, supply, and inflation. Lets just say that price is the heart of market economy. if the price goes up fast, inflation happens (just like someone's blood pressure shooting through the roof) and if prices go down, well thats when there is little certainty in the market and bad things happen again. If prices are stable with little inflation, then everyone lives happy.
2006-08-02 13:54:29 · answer #1 · answered by stcrystal00 1 · 1⤊ 0⤋
The price system , via the demand/offer system, defines the fundamentals economic issues of "What will be produced?", "How will it be produced?" and "For whom will it be produced?" (Samuelson, Paul - "Economics, An Introductory Analysis" - 1964) In the mid/long term it assures that the manufacturing goods are used more efficiently, meaning by efficiency the better satisfaction of demand. The products more required (in relation to supply) will see an increase in price. As a consequence, the profit of producing them will go up, and the supply will also grow, reducing the price. The opposite happens also. It is like the force of gravity forcing water to equalize levels in two tanks, looking for stability. (wow! I am not a poet!) Without a free price system (as it can be seen in many underdeveloped markets) resources are assigned inefficiently, promoting poverty. They produce what they should not, and viceversa.
2016-03-13 23:40:46 · answer #2 · answered by Anonymous · 0⤊ 0⤋
It is often the sole signal of information, the sole means of reflecting conditions of supply and demand at equilibrium or in disequilibriated state.
Price is effected upon by inflation, so it is not correct to say that price has anything to do with inflation, more that price over time can indicate the presence of inflation.
2006-08-02 02:58:19 · answer #3 · answered by Veritatum17 6 · 0⤊ 0⤋
This Site Might Help You.
RE:
what role does price play in a market economy?
I'm sure inflation has a big role but im not sure please help.
2015-08-19 06:32:36 · answer #4 · answered by Elna 1 · 0⤊ 0⤋
price is fluctuation with customer behavior , demand and supply so need to determined adverse effects in economy and can change the monetary value that increased goodwill of objects which is demand and supplied with natural phenomenon,
2014-08-07 03:05:31 · answer #5 · answered by Surendra 1 · 0⤊ 0⤋
Price is the determinant of everything. It is a fundamental failing of modern economics.
Roll on the triple bottom line.
2006-08-01 23:26:38 · answer #6 · answered by iansand 7 · 0⤊ 0⤋
The price you see is the price you play, although I usually haggle. It's amazing how many times you get something off if you just ask.
2006-08-01 23:39:57 · answer #7 · answered by Anonymous · 0⤊ 1⤋