Which one of the following is the best example of the incentive function of the price mechanism?
A rise in market price increases profitability, encouraging producers to allocate more resources to expanding their output.
A drop in chocolate supply causes prices to rise, conveying to buyers that the product is now scarcer.
A surge in demand for concert tickets forces prices up, excluding buyers who are unwilling to pay the higher rate.
The state imposes a maximum price on rented housing to make accommodation more accessible to low-income families.
16 exam-style questions on Edexcel A A Level Economics 1.2.7 Price mechanism. Each one has a worked solution and a mark scheme showing where the marks go.