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THE PRICE IS RIGHT

You know I reserve the right to be wrong.



Prices are the rates charged in transactions, usually understood as the money sum the buyer pays to the seller. Barter is actually subject to prices as well, but let's leave that for now as we all use one form of money or another these days.



FREE PRICES

Price freedom is the condition of prices moving up and down through the haggling of buyers and sellers; which is to say the preferences of buyers and sellers causing the levels of supply and demand to vary. This is a slightly different way of looking at supply and demand; te two very clearly exist, but


Buyers and sellers get the hint about each other's readiness or ability to exchange through price signals...



PRICE SIGNALS

Buyers want less of something that's in the shops, then the sellers take a hint in the form of a price signal. That is to say, the market in this good/product tells them "LOWER YOUR PRICE-TAG!"

The same process takes place in reverse; if interest in a good/product increases - more footfalls in the shop, let's say - they are sending a price signal that blares clearly "RAISE THE PRICE!"

Always there is a signal, and the price that it points to, as per the above diagram, is neither too low nor too high.


Another day, we will get around to fixed prices and what happens in the absence of price discovery. Suffice it to say, it ain't very nice. Economic calculation, it is a bastard...



On the next Ecomony Blogtime; MUAHAHAHAHAHAHAHAHAHAHA!!!!!!

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