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TOEFL Directory > TOEFL writing > 03 The Definition of Price?
03 The Definition of Price?
Prices determine how resources are to be used. They are also the means
by which products and services that are in limited supply are rationed
among buyers. The price system of the United States is a complex network
composed of the prices of all the products bought and sold in the
economy as well as those of a myriad of services, including labor,
professional, transportation, and public-utility services. The
interrelationships of all these prices make up the "system?of prices.
The price of any particular product or service is linked to a broad,
complicated system of prices in which everything seems to depend more or
less upon everything else.
If one were to ask a group of randomly selected individuals to define
"price? many would reply that price is an amount of money paid by the
buyer to the seller of a product or service or, in other words that
price is the money values of a product or service as agreed upon in a
market transaction. This definition is, of course, valid as far as it
goes. For a complete understanding of a price in any particular
transaction, much more than the amount of money involved must be known.
Both the buyer and the seller should be familiar with not only the money
amount, but with the amount and quality of the product or service to be
exchanged, the time and place at which the exchange will take place and
payment will be made, the form of money to be used, the credit terms and
discounts that apply to the transaction, guarantees on the product or
service, delivery terms, return privileges, and other factors. In other
words, both buyer and seller should be fully aware of all the factors
that comprise the total "package?being exchanged for the asked-for
amount of money in order that they may evaluate a given price.
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