Describe the role of prices in market economies. Explain each of the following statements using supply and demand diagrams. a. When there is a drought in southern Europe, the price of olive oil...

Describe the role of prices in market economies.

Explain each of the following statements using supply and

demand diagrams.

a. When there is a drought in southern Europe, the price of

olive oil rises in supermarkets throughout Europe.

b. When the Olympic Games were held in London in 2012,

the price of hotel rooms in central London rose sharply.

c. When conflict breaks out in the Middle East, the price of

petrol in Europe rises and the price of a used Mercedes

falls.