Free price system
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| - | A '''market economy''' is economy based on the [[division of labor]] in which the prices of [[goods]] and [[Service (economics)|services]] are determined in a [[free price system]] set by [[supply and demand]]. | + | 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 [[Money|monetary prices]] set by the interchange of [[supply and demand]]. The resulting prices serve as ''[[price signal|signal]]s'' 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. |
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| + | A free price system contrasts with a [[Administered price|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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| ==See also== | ==See also== | ||
| - | *[[Economic freedom]] | + | * [[Administered price]] |
| - | *[[Economic liberalism]] | + | * [[Invisible hand]] |
| - | *[[Free market]] | + | * [[Spontaneous order]] |
| - | *[[Grey market]] | + | * [[Self-organization]] |
| - | *[[Market socialism]] | + | * [[Subjective theory of value]] |
| - | *[[Market structure]] | + | * [[Market economy]] |
| - | *[[Mixed economy]] | + | * [[Capitalism]] |
| - | *[[Neoclassical economics]] | + | * [[Free market]] |
| - | *[[Planned economy]] | + | * [[Price system]] |
| - | *[[Price system]] | + | |
| - | *[[Regulated market]] | + | |
| - | *[[Social market economy]] | + | |
| - | *[[Socialist market economy]] | + | |
| {{GFDL}} | {{GFDL}} | ||
Revision as of 20:49, 7 July 2020
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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.
See also
- Administered price
- Invisible hand
- Spontaneous order
- Self-organization
- Subjective theory of value
- Market economy
- Capitalism
- Free market
- Price system
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 research by Jahsonic and friends. See Art and Popular Culture's copyright notice.
