Economics GCSE
The Price Mechanism
What The Price Mechanism means in Economics GCSE, as defined for Pearson Edexcel.
Definition of The Price Mechanism
The process by which price changes coordinate the decisions of buyers and sellers to allocate scarce resources. This involves the signalling function (conveying information), the incentive function (motivating agents), and the rationing function (distributing scarce goods).
Topics that use The Price Mechanism
- Demand, supply and market equilibrium (Pearson Edexcel GCSE)
Related terms
Using The Price Mechanism in the exam
Definition questions usually carry one or two marks, and examiners look for the precise wording. Write the definition from memory, check it against the version above, and then use the term in a longer answer on the same topic so it sticks.
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