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In: Economics

Explain why prices are always flexible.

Explain why prices are always flexible.

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Expert Solution

As we know that, production of goods and services needs inputs like land, labour, Capital and enterpreneur. These factors of production are paid rent, wages, interest and profits. We know that some factors are fixed whole as others are Variable.

Price are always flexible in the econnomy. When demand for goods is more than price tends to increase,on the other hand when demand is lower price tends to fall. Their is an inverse relationship between price and demand. The prices are always changing in the econnomy. The prices are not sticky but the price is dynamic.

The price for goods are changing with the change in demand and supply functions. The demand for goods and services greatly influenced the price , while as higher demand and lower supply also raises the prices of goods and services. More supply and lower demand will lead to decrease in price as well.so we can say that price today are not same tomorrow and the prices at yesterday are not same as today. The rates of inflation varies from time to time.

Hope you got the answer.

Kindly comment for further explanation.

Thanks ?

Rahul Sunny answered 2 years ago
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