Reasons for Having Prices

In class last week we talked about different kinds of economic systems and why having one is important. If we didn't have an economic system then there would be no organization and the needs and wants of consumers wouldn't be met. We also talked about the needs and wants of people and how prices are affected.

Everyone has needs and wants but there are a limited amount of resources, so in order to have limits on what's being produced and who gets what, prices are put on products. Humans wants exceed the amount of resources there are but people can also be satisfied in different ways. Since there are a certain amount of resources they can also be used in deferent ways and this leads to how prices are determined.

 Price determines what to produce, how much to produce, how to organize resources for production, and how to distribute output. So as you can see by this, price determines a lot of things. The economic system wouldn't be able to function without it. People have unlimited wants and just keep wanting more and more and in order for that to be controlled prices are set. This way people can only afford certain things and are limited to what wants they can get. This helps the resources that are scarce to be managed better and not run out as quickly as they would if there were no set prices.

Needs are completely different compared to wants. Needs are only the necessary things that humans need and what they need to survive. Needs come before wants and are put first. The difference between needs and wants comes down to the amount of money an individual has and what they are able to afford. As long as someone has the basic needs to survive they shouldn't complain about having a bad lifestyle. Maslow's hierarchy of needs is an example of a system that shows what motivate people and what they need to live and go on.

So as you can see there is a lot of things that affect the economic system. Mainly peoples wants affect the prices of things because they need to have enough resources to support everyone and not run out of things. Whereas the needs of a person are an absolute must. They're an essential part of your life.

https://www.youtube.com/watch?v=tzQ9vrvTAtk


Works Cited 

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"Hierarchy of Needs in Ratatouille." YouTube. YouTube, n.d. <https://www.youtube.com/watch?v=tzQ9vrvTAtk> Web. 04 Oct. 2014.

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"Maslow's Hierarchy of Needs." Wikipedia. Wikimedia Foundation, <http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs> 10 Mar. 2014. Web. 03 Oct. 2014.

"Unemployment and Inflation." Unemployment and Inflation. N.p., n.d. <http://www.harpercollege.edu/mhealy/eco212i/lectures/ch9-18.htm> Web. 04 Oct. 2014.