Interior design & furniture 2017
https://www.pinterest.com/daringabroad
Two Cheers for the Price System
As we have seen, a most impressive feature of a price and market system is that so many incentives are provided for efficient resource use and so many decisions are made automatically with a minimum of central direction. Prices serve as a rationing device, and also as a guide to the allocation of resources. When prices of a product are high, this serves as an incentive to produce and for consumers to seek substitutes. When prices are low, consumers are encouraged to substitute that product for those which are more expensive. When resources are costly, their use is discouraged and less costly resources tend to be used in production. The incentives of producers to produce those items which appear profitable, and by means which minimize costs, ensure that the questions of what and how to produce are answered with some measure of economic efficiency. And against, that this occurs with no central direction or guidance is of some considerable advantage.
Two Cheers for the Price System
As we have seen, a most impressive feature of a price and market system is that so many incentives are provided for efficient resource use and so many decisions are made automatically with a minimum of central direction. Prices serve as a rationing device, and also as a guide to the allocation of resources. When prices of a product are high, this serves as an incentive to produce and for consumers to seek substitutes. When prices are low, consumers are encouraged to substitute that product for those which are more expensive. When resources are costly, their use is discouraged and less costly resources tend to be used in production. The incentives of producers to produce those items which appear profitable, and by means which minimize costs, ensure that the questions of what and how to produce are answered with some measure of economic efficiency. And against, that this occurs with no central direction or guidance is of some considerable advantage.