Posted BY: | NwoReport
Are you the type of person who works hard, saves money, and invests with the intent of accumulating lasting wealth?
If so, you’ve likely noticed that things don’t quite add up between what you’re regularly told about how the economy and financial markets work and what you actually experience. We think there’s more to this than just dollars and cents.
The central feature of economics is prices. How they are determined and how people respond to them. This process establishes how prices adapt to meet the supply and demand pressures of the market.
Through experience, buyers can determine what’s a good deal or not. And they adjust their behavior accordingly. Similarly, through testing, sellers determine the optimal price of their products; a price where profit margin is best supported by sales.
For example, when airfares are cheap, a father may spring for long-distance plane tickets so his family can vacation somewhere exotic. When plane tickets are expensive, he may opt for a road trip and tent camping at a national park.
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Both experiences will create lasting family memories. Prices, nonetheless, are a critical determinant in the decision.
In fact, prices, and how people respond to them, are factored into nearly all free exchanges for fulfilling wants and needs. You may already have an ample supply of socks. But a ‘buy one get one free’ sale may incentivize you to buy more.
Your old beater car may work just fine. Still, you may want a new car that has all the latest digital integrations.
But how badly do you want it? Bad enough to sign-up for a $1,000 per month car payment? At that price, you’ll miss out on a lot of steak dinners.