Price and Price Mechanisms

Price is the value of a good or service in the market. Price mechanisms are strategies that impact and guide consumption by altering the price of the good (or service) relative to its substitutes.

Price is a key component of economic analysis due to its relation with quantity consumed in a demand curve. The term price refers to the market valuation of the good or service, and it does not indicate the specific valuation of the good to the consumer or the producer. Price represents the equilibrium point where demand meets supply, and it corresponds to the value where willingness to pay (WTP) equals willingness to accept (WTA). The importance of price stems from its role as cost to the consumer, and it determines the total ...