Question

Explain how prices act as signals to producers and consumers.

Answer 1

Sample Response: Prices can act as a signal to both producers and consumers. A high price tells producers that a product is in demand and they should make more. A high price tells consumers to think about their purchases more carefully. A low price indicates to consumers to buy more of the product.

Step-by-step explanation:

Edge 2020

Answer 2

Prices act as signals as items being sold in these days are quite high in price but when someone finds a good product at a good price, it attracts many people which makes more money for producers.