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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Describe the role of prices in market economies.

To determine

Role of prices in the market economy.

Explanation

The equilibrium of a market is restored by the prices and hence plays a vital role in market economies.

When the price is above the equilibrium price, quantity demanded is less than quantity supplied that is sellers want to sell more than buyers want to buy. This result in a surplus and the sellers try to increase their sales by cutting prices. This continues till the equilibrium price is reached...

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