Our choices involve tradeoffs. Market determined prices reward efficiency and higher levels of production. Command economy Economic system Market economy Mixed economy Negative incentive Positive incentive Traditional economy Markets Market economies are directed by prices. As the price of an item goes up, sellers are encouraged to supply more and buyers buy less. When the price falls, the opposite occurs.
Sellers use both price and quality to attract buyers.
Prices for different products are interrelated. Demand Market Price Quality Supply Marketing Marketing brings buyers and sellers together. Sellers have a variety of ways they promote a product. People trade to get what they do not produce. They have a greater selection of goods and services to choose from, often at lower costs than would be available at home.