What is in economics, what is the price system?
Price system in economics serves the function of regulation of production and consumption of goods by determining their monetary or business value. There are three different types of price systems in economics: free, mixed and fixed. Each of them is characterized by a number of controls that forces outside the market have prices and especially production factors that include soil, work and capital.
All modern companies use price systems. Price systems motivate both consumers and producers to decide. For example, in most cases the consumer chooses a product that is least expensive, and manufacturers decide to produce only products that will be profit. The price system informs both these decisions without having to communicate directly to the manufacturer and the consumer. The higher the demand for the product, the more motivating the manufacturer will do it, but manufacturers are also motivated to maintain prices to attract more consumers. This creates a situation where consumers and manufacturers are motivated by price.
in free C systemsEN, the competition between manufacturers allows prices to stabilize. Free prices systems create capitalism that is distinguished as a market in which individuals are entitled to control all production factors without government intervention. The profits are unlimited in free prices and are primary motivations for producers.
In a fixed prices system, the market is not left on its own devices; Instead, prices are controlled by forces outside the economy. Fixed price systems occur in centrally planned economies, where the government is a complete control of all production factors. Supplies and demand are not determined by prices, rather DECIDE planners, what to produce, how much to produce and how much to charge. Although the government decides what to produce in this economy, this does not change the needs of consumers, which can lead to a lack of some items and a surplus of others. Systems with fixed prices are the most common in countries KTEré has communist or socialist governments.
Fixed and free prices are extremes, one of which has no regulation and the other completely controlled by the government. Most nations cannot exist with a price system that is purely solid or purely free. The mixed price system is a combination of these extremes and produces an economy with government regulation and a free enterprise. Most modern economies have a price system that falls somewhere between a free price system and a fixed prices system. The United States is one of the examples of a mixed prices system that will approach the free market, and countries like China and Russia have pricing systems that are stronger.