Prices

Prices guide consumption choices by reflecting the relative scarcity and value of goods and services.

In a mixed economy with active state intervention, prices still play a role in resource allocation and consumption choices, but the state also intervenes to regulate prices and address market failures.

In a free-enterprise economy, the price mechanism works through the interaction of demand and supply forces. Buyers create demand, sellers offer supply, and the equilibrium price is determined.

<p>Higher prices encourage consumers to make choices based on their preferences and budget constraints.</p> Signup and view all the answers

<p>The equilibrium price in a free-enterprise economy is determined by the interaction of demand and supply forces.</p> Signup and view all the answers