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Prices convey info to producers as well. Prices tell producers what consumers want. Producers also use prices to appeal to the consumers they hope will buy their products.

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In a market-based economy, prices function as an incentive because they represent potential for profit. Falling prices serve as incentives for firms to cut back on production or even to leave a market to look for better opportunities elsewhere.

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Prices allow markets to adjust quickly when major events such as wars and natural disasters interfere with the production or movement of goods, wreaking havoc on supply. Natural disasters effect the economy.

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Perhaps the most important role in a market-based economy is to guide resources to their most efficient uses. Prices go by the consumers wants.