Practise applying the rationing, incentive and signalling functions of prices to scarce resources and changing market conditions.
Which one of the following is a function of the price mechanism?
An increase in the price of hand sanitisers, caused by an increase in demand, will ration them to those who are most able to pay
A decrease in the price of carrots, caused by excess supply, provides farmers with the incentive to increase supply
A decrease in the price of tinned meat is a signal to producers that demand for it is increasing
An increase in the price of petrol is a signal to the government to impose a maximum price
A