|
Prices determine how resources are to be used. They are also the means bywhich products and services that are in limited supply are rationedamong buyers. The price system of the United States is a complex networkcomposed of the prices of all the products bought and sold in the economy as well as those of a myriad of services, including labor, professional, transportation, and public-utility services. The interrelationshipsof all these prices make up thesystem of prices. The price ofany particular product or service is linked to a broad, complicated system ofprices in which everything seems to depend more or less upon everythingelse. If one were to ask a group of randomly selected individuals to define price, many would reply that price isan amount of money paid by the buyer to the seller of a product or serviceor, in other words, that price is the money value of a product or service as agreed upon in a markettransaction. This definition is, of course, valid as far as it goes. For acomplete understanding of a price in any particular transaction,much more than the amount of money involved must be known.Both the buyer and the seller should be familiar with not only the moneyamount, but with the amount and quality of the product or service to beexchanged, the time and place at which the exchange will take place and paymentwill be made, the form of money to be used, the credit terms and discounts thatapply to the transaction, guarantees on the product or service, deliveryterms, return privileges, and other factors. In other words, both buyerand seller should be fully aware of all the factors that comprisethe total package being exchanged for the asked-foramount of money in order that they may evaluate a given price. | 
