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Definition
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Prices determine how resources are to be used. They are also the means by which products and Nka 3H7 `
services that are in limited supply are rationed among buyers. The price system of the United States is `%*`rtZ+H.
a complex network composed of the prices of all the products bought and sold in the economy as well J3$@: S'
as those of a myriad of services, including labor, professional, transportation, and public-utility services. QW_BT ^d"
The interrelationships of all these prices make up the “system” of prices. The price of any particular ?_ eHvw
product or service is linked to a broad, complicated system of prices in which everything seems to -_= m j
depend more or less upon everything else. Cv [1 HO<
If one were to ask a group of randomly selected individuals to define “price”, many would reply that /@&#U bN\
price is an amount of money paid by the buyer to the seller of a product or service or, in other words D 4sp+
that price is the money values of a product or service as agreed upon in a market transaction. This }ld^zyL
definition is, of course, valid as far as it goes. For a complete understanding of a price in any jZ''0Lclpc
particular transaction, much more than the amount of money involved must be known. Both the buyer $laUkD#vz
and the seller should be familiar with not only the money amount, but with the amount and quality of Dt(x
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the product or service to be exchanged, the time and place at which the exchange will take place and L3A2A
payment will be made, the form of money to be used, the credit terms and discounts that apply to thetransaction, guarantees on the product or service, delivery terms, return privileges, and other factors. )iFXa<5h
In other words, both buyer and seller should be fully aware of all the factors that comprise the total ;SX~u*`R
“package” being exchanged for the asked-for amount of money in order that they may evaluate a '4CD
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given price. 0 {
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Electricity >`p?
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The modern age is an age of electricity. People are so used to electric lights, radio, televisions, and hzT)5'_
telephones that it is hard to imagine what life would be like without them. When there is a power iB` EJftI!
failure, people grope about in flickering candlelight, cars hesitate in the streets because there are no RhC|x,E
traffic lights to guide them, and food spoils in silent refrigerators. 8H|ac[hXK2
Yet, people began to understand how electricity works only a little more than two centuries ago. nLCaik_,m
Nature has apparently been experimenting in this field for million of years. Scientists are discovering
