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how do prices enable a market economy to adjust to unexpected events?

economices

Asked by: 999 days ago - 1 Answers - 2871 views

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    Price adjust to supply and demand. As demand increases, price goes up. As supply increases, price goes down. Eventually supply will increase to a point where demand will begin to decrease and take down price, as well. An unexpected event, then, has a high impact on the supply demand relationship and prices will naturally adjust accordingly.

    Example: a hurricane erases a large portion of supply for tomatoes. The result is increase in price on tomatoes.

    Answer by Rick 998 days ago


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