... it should allocate "factors of production" in the most efficient and profit maximising way to satisfy not only the consumers needs but provide the relevant information within the market to make rational decisions, where this transaction may take place. Hayek (1945) argues that "price contains all the information you need to base your transaction on: it is a sufficient statistic" The co-ordination between the total quantity demanded by the consumer and the total quality supplied by the producer is achieved through the mutual interaction in the market, which indefinitely determines price. The demand curve is a graphical representation of a demand schedule. The law of demand states that at higher prices buyers demand smaller amounts, while at lower prices they demand larger amounts. However, with exception to that, price inelastic products (salt) will not change accordingly to a change in price as the consumer perceives them as having no substites. Fig.1 ...

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