Sunday, April 18, 2010

Q: What Sort Of Information Do Prices Convey?

Prices reflect the value consumers subjectively ascribe to the qualities and attributes associated (or thought to be associated) with the good or service in a world constrained by scarcity.

In essence, prices are a reflection of both the material world and the spiritual world thus mirroring the human reality. The material world is what it is; depending on the knowledge and physical limitations that exist (scarcity) at that point in time. The aspirations for more perfection in the reflections of the name and attributes of God is what is behind the insatiable desire that is driving what is termed as 'unlimited demand.'

The market is where these forces become expressed as prices. The market process is where the entrepreneurial spirit creatively serves to improve the conditions of supply and to refine demand.

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