Title: Chapter four: Pure Capitalism and the market system
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Content: In other words, the least-cost combination is the level of input use that produces a given level of output at minimum cost. On the other hand, in a price system, competition will force firms to use the least cost combination method. Competition means there are large numbers of buyers and sellers in each market that are acting independently. Therefore, those firms that use the least cost combination method will be able to lower the price of their products and make a profit. For whom it will be produced? The distribution of goods and services depends on the distribution of money income. Money income, in turn, depends on the quantity, quality and the types of resources and the prices of the product. Therefore, the distribution of finished goods and services will depend on consumers� ability and willingness to pay the market price. In fact, relative prices ration the available resources, goods and services. Resources may be allocated by tradition, by markets, or by planning.