In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.
In modern economies, prices are generally expressed in units of some form of currency. (For commodities, they are expressed as currency per unit weight of the commodity, e.g. euros per kilogram.) Although prices could be quoted as quantities of other goods or services this sort of barter exchange is rarely seen. Prices are sometimes quoted in terms of vouchers such as trading stamps and air miles. In some circumstances, cigarettes have been used as currency, for example in prisons, in times of hyperinflation, and in some places during World War 2. In the black economy, barter is also relatively common.
In many financial transactions, it is customary to quote prices in other ways. The most obvious example is in pricing a loan, when the cost will be expressed as the percentage rate of interest. The total amount of interest payable depends upon the loan amount and the period of the loan. Other examples can be found in pricing financial derivatives and other financial assets. For instance the price of inflation-linked government securities in several countries is quoted as the actual price divided by a factor representing inflation since the security was issued.
Price sometimes refers to the quantity of payment requested by a seller of goods or services, rather than the eventual payment amount. This requested amount is often called the asking price or selling price, while the actual payment may be called the transaction price or traded price. Likewise, the bid price or buying price is the quantity of payment offered by a buyer of goods or services, although this meaning is more common in asset or financial markets than in consumer markets.
Economists sometimes define price more generally as the ratio of the quantities of goods that are exchanged for each other.
Famous quotes containing the word price:
“The price we pay for the complexity of life is too high. When you think of all the effort you have to put intelephonic, technological and relationalto alter even the slightest bit of behaviour in this strange world we call social life, you are left pining for the straightforwardness of primitive peoples and their physical work.”
—Jean Baudrillard (b. 1929)
“How long most people would look at the best book before they would give the price of a large turbot for it?”
—John Ruskin (18191900)
“I sometimes think that the price of liberty is not so much eternal vigilance as eternal dirt.”
—George Orwell (19031950)