incentive functions

How Do Prices Help Allocate Resources?

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How Do Prices Help Allocate Resources? Markets use prices as signals to allocate resources to their highest valued uses. Consumers will pay higher prices for goods and services that they value more highly. … The interaction of demand and supply in product and resource markets generates prices that serve to allocate items to their highest

What Are The Three Functions Of Price In A Market Economy?

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What Are The Three Functions Of Price In A Market Economy? In fact, this function of prices may be analyzed into three separate functions. First, prices determine what goods are to be produced and in what quantities; second, they determine how the goods are to be produced; and third, they determine who will get the