Feedback in economics

In economics, feedback refers to the process where the outcomes of a decision or action influence future actions. For example, if a company raises prices and sales drop, the negative feedback may prompt them to reconsider their pricing strategy. Conversely, positive feedback occurs when successful actions encourage more of the same, like when a popular product boosts a company's reputation and sales. Feedback mechanisms help economies adjust and adapt over time, ensuring that resources are allocated more efficiently based on the responses of consumers and producers to market changes.