The advantages and disadvantages of the price mechanism and of extending its use into new areas of activity
The price mechanism allocates resources through supply and demand. It does this well in some situations, but it also produces unfair or inefficient outcomes in others.
Real World
Uber's surge pricing is the price mechanism in action: higher fares during storms or late nights signal scarcity of drivers, incentivise more drivers onto the road, and ration rides to those with highest willingness to pay — but critics argue it disadvantages lower-income passengers.
Exam Focus
Structure advantages and disadvantages using clear connectives ('however', 'in contrast'); avoid listing without explanation to access higher mark bands.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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