Economic Indicators: Price Mechanism

Economic Indicators: Price Mechanism


I’m no Communist, I’ll tell you that right now, I believe a man should own his own house and car and cow I like this private ownership, I want to be left alone, let the government run its business and let me run my own So prices give us incentives and they give other people incentives basically to get things done, because we can’t do everything for ourselves, we get other people to do things for us and prices are an important part of that. So prices will also determine how much each resource gets used, it does this through consumers demand, consumers will dictate what they want, and specifically to what consumers demand, it relates to what will get produced more of and that will determine how much each resource will get used. People often confuse prices as a barrier to what people want, rather what prices are is an indicator to what people want through the means of supply and demand. Supply and demand is important to understand; if you have a high supply of something, there’s more of it to go around, therefore there’s going to be a lower demand, meaning a lower cost; whereas if you have a lower supply of something, there is a scarcity, meaning there’s going to be a higher demand and of course a higher cost. Prices is not what causes scarcity, scarcity is determined by how much of those resources are available to us and how high a demand there is for those resources. So as we pointed out, high prices in the market signifies scarcity and prices can be a good incentive to change the behaviour of customers, customers may spend less on the higher costs and it’s a very good thing because of the scarcity where they may spend more on the lower costs where there is an abundance of resources. Prices can be a good incentive to producers to lower their costs; perhaps they have a certain product that isn’t selling as well, so they may reduce the costs of the product to increase consumers demand to try and sell off; they will make losses, but not as heavy losses as they would if they kept the price high. So people confuse Capitalism as just a system of profits, Whereas Capitalism is all about profits and losses. It’s important to understand losses because what losses tell the market, is what to stop producing more of, where to stop putting resources and what to stop investing in. In other words, it tells businesses that if they produce certain products and the product isn’t selling, they’re not going to produce more of that, not only because the fact that they would be making losses in doing so as a business, as a businesses goal is to make profits but also because, it’s wasting valuable resources and resources are scarce. So, it’s important to understand, that Capitalism isn’t just about, you know profits, but of course, also losses; whereas the profits tell the businesses what they must produce more of and what to invest in and where to put resources. So it’s very important that people understand, Capitalism is more than just profits, it’s profits and losses. So another thing that is important to understand about prices, prices aren’t just a random number that is thrown out there, it’s determined by consumers demand, what consumers are willing to pay for it. So in other words, you could produce certain products, you could throw the product out there and to set what you value the product at, but that’s all well said and done it’s what your consumers are willing to pay for that product that will determine its price. and it’s also important to understand that competition, through what your competition is going to charge, if your competition charges less, that will determine where your consumers are going to go. So competition and of course consumers demand is what determines prices. So if you have any questions at all, feel free to ask me in the comments section below and I’ll be sure to get back to you. Thank you for watching my video and I shall talk to you’s later, cheers! Hi people, how’s it going? Just wanted to let you know that I’m working hard to get all my new videos up and running. If you like my channel, feel free to subscribe and of course I value all my viewers and subscribers and working hard to get obviously my channel up and running again. So, thank you for watching and I shall talk to you’s later!

18 Comments on "Economic Indicators: Price Mechanism"


  1. Great Video man, I have learned more in this video than I ever had in High School.

    Reply

  2. Where did you get the footage of the auto factory, and the market with the tea and shell fish? The part at about 1:23 looks like the California desert. Does copyright ever concern you?  Even that California Republic flag I use, I found a photo that someone expressly released into the public domain.

    Reply

  3. Wait a minute. 3:05 I thought if losses occurred in the market place, it meant the government should establish a price floor to keep this excess production going and keep raising the price floor so that people could not afford the product anymore.  At that point, I thought it was the government's job to buy what people could afford before the price floors.  Then, the government taxes the citizens even more to hire a bunch of government employees to hand out this product to the people who could afford it before the price floors were put in place.

    Reply

  4. Hi Scotty, I've got a question for you that I received whilst debating with another youtuber that raised a question surrounding production ethics within a Capitalist society.  I don't have the question with me, but I'll give you the gist…
    Since industry in a Capitalist economy can be likened to shops from a supply and demand perspective and competition from other industries can be likened to competition between shops. 

    1)  Would the incentive to produce products at the lowest possible cost override a company's ethical incentive to provide safe working conditions for their staff? 

    And so, leading on from this question;

    2)  Wouldn't it be necessary to adopt some government policies to provide protection for these workers?

    and if this was done;

    3)  Wouldn't that adoption of government policy cause a flight of industry away from the country that requires adoption of these policies?

    Reply

  5. No, no, no!!!

    I am an honest, hard working man. Therefore, you or others must take and find use for the things I make and services I offer whether you want them, need them or not. In return, so long as you and others are honest and hard working, I will take and find use for the things you or others make, or services you or others provide, whether I want them , need them or….. …. …

    Nope … yer deid right big man.

    Reply

  6. Good to see you passed eco 101 too bad both Adam Smith and Karl Marx would double team your ass if they had the misfortune of having to hear this shit. I know 13 year old children who could give a more in depth account of the market.

    Reply

  7. Because there is a lower supply of something this does not necessarily mean it is in a higher demand, so this video is partially incorrect.

    Reply

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