What are the vital functions of an economy? explain the price mechanism?
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The vital functions of an economy are:
Production – This function is concerned with ensuring that production or manufacturing of the products go on continuously without interruption.
Consumption – This function involves using financial goods and services such that they satisfy human needs.
Growth – This function involves increasing the per capita income of the country over an extended period of time.
Price mechanism is an aspect where the prices for services or goods affect their supply and demand. It can affect both buyers and sellers alike. Therefore, the pricing decision is done after interaction between the businesses that offer the products and/or services and consumers.
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