How do prices help guide economic decisions in a market?
Answer (1)
Prices act like signals. When the price of pork goes up due to shortages (like during the African swine fever outbreak in the Philippines), buyers may shift to chicken, and sellers might import more pork or raise pigs. High prices tell sellers to supply more, and low prices attract buyers. In a market, prices help both buyers and sellers make decisions about what to buy or produce. Without prices, the economy would be confusing because no one would know how much to pay or earn.
