Characteristics of the Price

System
In a Market Economy
 It is neutral.

Consumers are totally free to buy products within a price range that they
can afford. Meanwhile, producers have the right and the ability to
choose any price for the products that they sell. Therefore, the
equilibrium in prices is achieved by many interactions between the
consumers and the producers. The market price is the point where the
demand and supply curves intersect.
 Prices are Market Driven.
We live in a free market economy. When prices are high, supply increases as a
result as more firms join the market. For example once smartphones were new,
there were only a few producers in the market and the prices were considerably
high;however, once more producers joined the market prices started to decrease.
The intersecting point between the supply and demand curve is the market price
 Prices are Flexible.

Prices are open to negotiations between the buyers and the

sellers, therefore bargaining is allowed up to a certain point.
 Prices are Efficient.

Resources are allocated efficiently since prices adjust until

the maximum amount number of goods and services are
sold.
Thank you for your time.