8.3 Fundamentals of Capitalism

How are prices set in a capitalistic system?

Prices are set by supply and demand. Supply is the number of products that will be offered for sale at a particular time and place. Demand is the number of products that will be bought at a particular time and place.

Other factors that influence price include the incentive to generate profit and competition among businesses.

Interesting fact:

In March 2015, sales fell 3.4% for Ford and 2.4% for General Motors, while Fiat Chrysler Automobiles rose in sales by 1.7% (USA Today).