The functions of price mechanism in a free market economy, Macroeconomics

Price Mechanism

Price mechanism is the point, which equilibrates supply and demand within a market. It is a mechanism of pricing. The price mechanism is one, which permits the prices of goods and services to be determined by the interplay between supply and demand. There is no centralized price fixing.

The price mechanism is the concept that the free market, when left to its own devices, will invent fair prices of the goods or services on its own by the natural laws of supply and demand.

 

Posted Date: 4/1/2013 3:59:06 AM | Location : United States







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