The allocative function of price cannot operate unless there is:

1 answer:

7 0

The idea behind the allocative function of price is to distribute scarce goods to those consumers who value them most highly. 
Allocative function is the role that prices play in directing resources away from overcrowded markets and towards markets that are underserved . The allocative function of price cannot operate unless there is free entry and free exit.

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3 years ago

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3 years ago

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nikdorinn [45]

Answer:

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Explanation :- Camaro and Ford Mustangs are substitute goods because the cross-price elasticity between Ford Mustangs and Camaro is in positive. Accordingly, with the decrease in price of camaro, the quantity sold of Ford Mustangs will also decrease.

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Part 3). Answer :- Quantity of Ford Mustangs will increase by 15 % (3 * 5 %).

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