= Price signal
{wiki=Price_signal}
A price signal refers to the information conveyed by the price of a good or service in a market economy. It arises as a result of supply and demand dynamics and serves several critical functions in economic decision-making. Here are some key aspects of price signals: 1. **Indicator of Scarcity and Demand**: When demand for a product increases and supply remains steady, its price typically rises. This signals suppliers to produce more of that product, indicating scarcity and heightened consumer interest.
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