Question

What are three functions of price in market economy

Answer 1

Signalling function. Prices perform a signalling function – i.e. they adjust to demonstrate where resources are required. ...

Incentive function. Through choices consumers send information to producers about their changing nature of needs and wants. ...

Rationing function.

Step-by-step explanation:

Answer 2

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 goods.