Question

Describe the role of prices in marketing economics?

Answer 1

In marketing economics,price is determined by demand and supply. Price also acts as a signal when there are shortages and surpluses which helps the firms to respond to changing the marketing conditions.

And at this point, price plays a vital role in an economy by allowing demand and supply yo reach equilibrium.

If a good is in limited quantity, price may tend to rise which discourages demand and encourage firms to increase their supply.

If a good is in surplus quantity, price will tend to fall which encourage people to buy more and demand rises and cut back on supply.