When we look at the economy as a system, markets are subsystems. From this perspective, the price mechanism describes how some elements of the market system interact with each other. But what is the purpose of a market?
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I have arrived at the price mechanism, how excess in demand drives prices up, and excess in supply drives them down – under normal circumstances and with everything else unchanged -, to end up at an equilibrium price and quantity cleared. But what happens to the excess supply, or the excess demand?
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