One price scale for unlike goods
A price turns a good into a number of money units. That makes unlike items comparable on the same scale: a chair and a basket of apples can each be priced in dollars, even though one cannot be measured in the other. Economists call money’s role as a common way to state prices a unit of account.
The number does more than help shoppers choose. It gives buyers and sellers a shared reference for deciding whether a trade is worthwhile. A customer can compare the chair’s price with the cost of something else they could buy; a maker can compare the price with the materials and labor needed to produce it. These are comparisons of value and alternatives, not claims that the goods are physically alike.
What a price can—and cannot—tell you
When demand for an item rises relative to its supply, sellers may be able to charge more. The higher price can encourage buyers to use less and give producers a reason to make more. In that way, prices help coordinate decisions made by people who do not need to know one another or agree on a single plan.
But a price is not a complete measure of worth. It reflects what buyers can and will pay under particular conditions, as well as what sellers can supply. It does not automatically include every consequence of producing or using an item, such as pollution borne by others. Money makes comparisons easier; it does not make every important value visible in the price.
