Economic Signals and Incentives

Shop at a different location = Price of something goes up Find a suitable substitute = Price of something goes up Stop producing other items = Product with a higher price Increase production of a product = Product with a higher price

Labor = Increase production of a product Capital = Stop producing other items Machinery = Stop producing other items

Incentives = Encouragements Price signals = Signals we get from prices Substitute = Suitable alternative Production = Manufacturing or creation

<p>Market equilibrium is the state where the quantity of a product demanded by consumers is equal to the quantity supplied by producers.</p> Signup and view all the answers

<p>Equilibrium price is the price at which the quantity of a product demanded by consumers is equal to the quantity supplied by producers, resulting in no shortage or surplus.</p> Signup and view all the answers

<p>A shortage occurs when the quantity of a product demanded exceeds the quantity supplied, while a surplus occurs when the quantity supplied exceeds the quantity demanded.</p> Signup and view all the answers