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What Do Prices Reflect In Economics?

January 24, 2024 by David Martineau

What Do Prices Reflect In Economics? Economic price theory How does scarcity affect price? In a free market, it can be expected that the price will increase to the equilibrium price, as the scarcity of the good forces the price to go up. When a product is scarce, consumers are faced with conducting their own

Do Prices Reflect Scarcity?

January 24, 2024 by David Martineau

Do Prices Reflect Scarcity? Do prices reflect scarcity? The price mostly reflects the scarcity of the inputs but not that of the product. On the other hand, those items with scarcity value have inelastic or even vertical supply curves, so that an increase in the demand for the product mostly increases the price and not