Answer to Question #59828 in Microeconomics for Suchandrima ghosal

Question

Why is price mechanism said to be an institution of exchange?

Answer 1

Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. Price mechanism affects both buyers and sellers who negotiate prices of goods or services. In other words, price mechanism said to be an institution of exchange between buyers and sellers, who exchange goods and services for money and vice versa.