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1.8.1 How markets and prices allocate resources
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The price mechanism

The price mechanism

Flow diagram showing a rise in demand causing a shortage and higher price, with rationing, incentive and signalling branches leading to a new equilibrium

The price mechanism is the system through which changes in relative prices allocate scarce resources in a market economy. It coordinates the decisions of buyers and sellers without requiring a central planner.

1.8.1 How markets and prices allocate resources Lesson

  1. A Level
  2. /Economics
  3. /1.8.1 How markets and prices allocate resources

Step-by-step lessons covering AQA A Level Economics 1.8.1 How markets and prices allocate resources for A Level Economics. Each lesson works through exam-style questions in Paper 1, Paper 2 and Paper 3 format. Start with the core supply-and-demand models before moving on to the more evaluation-heavy macroeconomic policy topics.