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-Prices can tell you how much of something there is. If the price is high, there isn't much of it, and vice versa.

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-Prices can tell you how much of something there is. If the price is high, there isn't much of it, and vice versa.

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-Prices can also signal opportunity costs to consumers. When the price is higher, like when you're buying a t.v., people are more likely evaluate the opportunity cost and will research different brands and do research to make sure they get their money's worth. Producers will also target specific groups by changing their prices to get consumers to buy their products

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-Prices can also signal opportunity costs to consumers. When the price is higher, like when you're buying a t.v., people are more likely evaluate the opportunity cost and will research different brands and do research to make sure they get their money's worth. Producers will also target specific groups by changing their prices to get consumers to buy their products

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Rising prices in a market motivate firms to produce more and encourage new firms to enter the market. 

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Rising prices in a market motivate firms to produce more and encourage new firms to enter the market. 

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When home prices increase, for instance, it signals construction firms, architects, and builders that the housing market is worthwhile and has the potential for profits.

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When home prices increase, for instance, it signals construction firms, architects, and builders that the housing market is worthwhile and has the potential for profits.

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When natural disasters wreak havoc on supply, markets can change their prices to recover from the event.

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When natural disasters wreak havoc on supply, markets can change their prices to recover from the event.

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For example, when two hurricanes occurred in the early 2000s, gas prices fluctuated wildly to respond to the disruption in oil supply.

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For example, when two hurricanes occurred in the early 2000s, gas prices fluctuated wildly to respond to the disruption in oil supply.

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Prices can guide resources to their most efficient use. 

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Prices can guide resources to their most efficient use. 

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Firms whose dairy products are in high demand will buy the most milk to meet their demand for dairy products. 

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Firms whose dairy products are in high demand will buy the most milk to meet their demand for dairy products. 