What’s the price?

In economics, the meaning of price is the amount of money that society must assume in exchange for a good or service. It is also defined as the amount of money assigned to an item or the sum of the values ‚Äč‚Äčthat buyers exchange for the benefits of using or enjoying a service or good.

The concept price refers to the monetary value fixed to a certain article or service, which implies elements such as effort, dedication, utility, raw material or time.

The price, in a free market economy, is set by the Law of supply and demand, where the final value is altered by the excess or absence of supply-demand. In the event that supply exceeds demand, prices are usually lower since the producer has the need to lower the amounts to place his articles on the market, while in the opposite case, when there is more demand than supply, the price tends to skyrocket, since it is something that is scarce, people are willing to pay more to get it and the producer raises the price.

Over time, prices may increase (inflation) or decreases (deflation). Both in one case and the other, price variations are established through a series of existing price indices, which is known as IPC.

From an economic perspective, price is a value. A service or product that is exchanged has a value for the customer according to its ability to provide a benefit, satisfy a need or solve a problem.

In the field of Law, the concept of price is also used to refer to the contraprestación in money. It is used to name the effort, suffering or loss necessary to achieve something. An example is the expression, this man paid a high price to achieve his goals.

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