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What is price mechanism?

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Economist

Price mechanism is the relationship between market forces (demand and supply) and prices of a commodity.
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The way in which Price is determined through market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service-... read more

The way in which Price is determined through  market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service- neither overestimated nor underestimated. But the problem arises when government comes to intervene. 

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Price is generally determined by the market forces, i.e. demand and supply.If the supply of goods increases as compared with demand of goods then price of that product tend to fall by market forces because the request does not meet with the supply of goods, so there is a glut in the market.On the other... read more

Price is generally determined by the market forces, i.e. demand and supply.
If the supply of goods increases as compared with demand of goods then price of that product tend to fall by market forces because the request does not meet with the supply of goods, so there is a glut in the market.
On the other hand, if demand is more than the supply of product then its price increase.
The most famous example in these days. Now in Navratris prices of potatoes and fruit increases because of a sudden rise in its demand and the same thing happen with dates in Roza during Ramzan(fast).

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Tutor

It s mechanism in which prices guide the flow of factors which bring the market to an equilibrium. Suppose, there is excess supply in the market. However, the participating buyers and sellers do not necessarily know that. The price starts falling in response to excessive supply. This signals the market... read more

It s mechanism in which prices guide the flow of factors which bring the market to an equilibrium. Suppose, there is excess supply in the market. However, the participating buyers and sellers do not necessarily know that. The price starts falling in response to excessive supply. This signals the market participants that there is too much supply so that they adjust their behavior and the market reaches a equilibrium with lower price and higher quantity. This is the price mechanism. This is in contrast to the planning mechanism where the central planner decides how much to produce rather than using price adjustment to guide the market.

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It is manner in which supply and demand of goods and services is affected by the profits of the goods and services i.e principally by the price elasticity of demand .
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Its a mechanism where the forces of demand and supply determine the prices of commodities and the changes therein. If there is excess supply in the market the price mechanism will help to eliminate the surplus goods by allowing the market price to fall.
Comments

The way in which Price is determined through market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service-... read more

The way in which Price is determined through  market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service- neither overestimated nor underestimated. But the problem arises when government comes to intervene.

read less
Comments

Tutor

Price mechanism is an economics term, which says that demand and supply of goods and services set their prices. The price mechanism is the process by which the price of commodities is determined by the forces of supply and demand. Price of goods and services affect the supply and demand or you can... read more

Price mechanism is an economics term, which says that demand and supply of goods and services set their prices. 

The price mechanism is the process by which the price of commodities is determined by the forces of supply and demand.

Price of goods and services affect the supply and demand or you can say it is the study fo price elasticity. of demand.

It affects both sellers and buyer who negotiate the prices.

For example, if a government remove any goods from government control say diesel, after that the price of diesel will depend on demand and supply in that country.

 

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The way in which Price is determined through market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service-... read more

The way in which Price is determined through  market interaction between two conflicting agents sellers and buyers, until willingness to receive of sellers and willingness to pay of buyers finally matched is called price mechanism. It is the main instrument used in market system to value a good or service- neither overestimated nor underestimated. But the problem arises when government comes to intervene. 

read less
Comments

A price mechanism is the way or the manner in which the prices of goods or services in general affects the supply and demand of goods and services, mainly via price elasticity of demand. This mechanism fabricates the entire economic phenomena of the economy.
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