In a price system, the signals sent to business people by losses are just as important as the signals sent by large profits.

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In a price system, losses signal to business people that they are not meeting consumer demands or producing goods/services efficiently. This allows them to adjust and improve their operations. Just as profits signal success and demand, losses signal the need for change and improvement. Therefore, both signals are equally important in a price system.

In a Price System, the Signals Sent to Business People