Module 3 Study Questions.docx - Module 3 Study Questions...

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Module 3 Study QuestionsChap 71)Prices frequently change in a price discovery system compared to a price setting system where prices fluctuate frequently. This is because changes in the price of commodities result from changes in the negotiation of price between buyers and sellers for each commodity. This differs from the price setting system where changes in the price of commodities result directly from changes in the supply and demand for each commodity. So, price fluctuates more often in a price discovery system because buyers and sellers are constantly looking to negotiate the best price for their individual firm. 5) In a price setting system supply and demand influences the price of commodities. This is apparent because when graphing a supply and demand curve a change in either the supply or demand for a particular commodity will result in a change in the market equilibrium price forthat commodity.

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