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 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 .

In other words, that price is the money value of a product or service as agreed upon in a market transaction. This definition is, of course, valid as far as it goes. But for a complete understanding of a price in any particular transaction, much more than the amount of money exchanged must be known.

Both the buyer and the seller should be clear about not only the money amount to be exchanged, but also with the amount and quality of the product or service to be exchanged, the time and place at which the purchase will take place , the form of payment 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.