ECS1500
ASSIGNMENT 1 SEMESTER 1 & 2 2021
UNIQUE NUMBER: 287050
1.1 2 Reference: S.G p 12 – 13
Prices provide essential signals to what the various economic
participants react voluntarily to bring about a seemingly organised
economic order. Prices present the value of the product in monetary
terms. The price reflects the terms which the buyer and the seller are
willing to exchange the product. Any movement in the price of the product
reflects changes in the demand and supply conditions and indicate to
producers how valuable it is to produce the product. A decrease in prices
is associated with either a lack of demand or excess supply. This warns
producers against expanding their production. At the same time,
consumers might want to benefit from the lower price level by going on
a spending spree. An increase in price would suggest exactly the
opposite. It is quite easy to visualise how these signals will bring about
voluntary responses from the different market participants (producers
and consumers) so that greater balance between demanders and
suppliers of goods and services in the system is achieved.
ASSIGNMENT 1 SEMESTER 1 & 2 2021
UNIQUE NUMBER: 287050
1.1 2 Reference: S.G p 12 – 13
Prices provide essential signals to what the various economic
participants react voluntarily to bring about a seemingly organised
economic order. Prices present the value of the product in monetary
terms. The price reflects the terms which the buyer and the seller are
willing to exchange the product. Any movement in the price of the product
reflects changes in the demand and supply conditions and indicate to
producers how valuable it is to produce the product. A decrease in prices
is associated with either a lack of demand or excess supply. This warns
producers against expanding their production. At the same time,
consumers might want to benefit from the lower price level by going on
a spending spree. An increase in price would suggest exactly the
opposite. It is quite easy to visualise how these signals will bring about
voluntary responses from the different market participants (producers
and consumers) so that greater balance between demanders and
suppliers of goods and services in the system is achieved.
