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Why are prices important in a market economy?

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User Dizzyf
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2 Answers

3 votes

Answer:

They let businesses find out what people want so they can supply it.

Step-by-step explanation:

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User Ewald
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6 votes

Answer:

The price of goods plays a crucial role in determining an efficient distribution of resources in a market system. Price acts as a signal for shortages and surpluses which help firms and consumers respond to changing market conditions. ... Falling price encourage people to buy, and cause firms to try and cut back on supply.

Step-by-step explanation:

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User Tjeerdhans
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