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Response to What is the Price Mechanism?
from Richard Onyai (jadoch929@hotmail.com)
The price mechanism is a system of determination of prices and
resoucre allocation.
It operates in a free market situation where forces of demand and
supply dictate prices.
Both producers and consumers base their respective production and
consumption plans on the prevailing market price.
When consumers pay a price for a commodity, they motivate the
producer of that commodity and hence more of the same is produced and
vice versa.
The price paid becomes a vote for more production.
Thus resources are channelled there!
(posted 7872 days ago)
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