Free price system  

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Kunstformen der Natur (1904) by Ernst Haeckel
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Kunstformen der Natur (1904) by Ernst Haeckel

A free price system or free price mechanism (informally called the price system or the price mechanism) is a mechanism of resource allocation that relies upon monetary prices set by the interchange of supply and demand. The resulting prices serve as signals communicated between producers and consumers which serve to guide the production and distribution of resources. Through the free price system, supplies are rationed, income is distributed, and resources are allocated.

A free price system contrasts with a fixed price system where prices are administered by government in a controlled market. The price system, whether free or controlled, contrasts with physical and non-monetary economic planning.

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Unless indicated otherwise, the text in this article is either based on Wikipedia article "Free price system" or another language Wikipedia page thereof used under the terms of the GNU Free Documentation License; or on original research by Jahsonic and friends. See Art and Popular Culture's copyright notice.

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