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How Markets Work - The Price Mechanism

AS, A-Level
AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

This is a revision presentation on the price mechanism

The Price Mechanism

The foundation of all AS microeconomics papers is an understanding of the price mechanism model and its limitations. Market prices ration, signal and allocate – hopefully you will be confident in explaining each of these functions. More importantly, this is a part of your revision when you can apply supply and demand concepts to analyse changes in market prices and consider some of their effects – this is the price mechanism at work. A change in price in one market will very likely affect related industries.

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