Unformatted text preview: oduction
is their primary line of defense in maximizing profits.
Their secondary line of defense is seeking to have
some control over the prices of the goods and services
they produce, but this is a story for another day.
Producers choose the mix of resources resulting in the
least-cost combination of producing the goods while
continuing to maintain a concern for quality of the
finished product. Prices of relevant resources used in
production helps answer this question.
In conclusion, it is important to accentuate the
importance of the function of price in the market
system. Price drives almost every critical production
and consumption decision. Who will receive the goods once
they have been produced? Who will receive the goods and services once they
have been produced? The market process and price (of the good or
service) answers this question automatically
in that those who can afford the goods will
receive them. You and I can answer this question easily because we
completely understand that we can have the goods
and services if we can afford them within our budget. This is referred to as the rationing function of
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.
- Spring '09