Prices serve as signals from "summary" of Principles of Economics by Saifedean Ammous
Prices serve as signals to both producers and consumers in a market economy. When the price of a good or service increases, it signals to producers that there is high demand for that product. In response, producers may increase production in order to take advantage of the higher prices and thereby increase their profits. On the other hand, when the price of a good or service decreases, it signals to consumers that there is an abundance of that product in the market. Consumers may then adjust their purchasing behavior accordingly, either by buying more of the product or by seeking alternatives that offer better value for money. These price signals help to efficiently allocate resources in...
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