In the UK, during fuel shortages in 2021, petrol prices rose sharply. This signalled consumers to reduce usage and prompted suppliers to increase deliveries where possible. Similarly, rising house prices in London reflect strong demand and limited supply, signalling property developers to build more homes in high-demand areas.

The price mechanism also helps ration scarce goods—for example, limited-edition concert tickets for events like Glastonbury are allocated to those willing to pay higher prices.

Overall, the price mechanism coordinates economic activity without the need for central planning.

However, the price mechanism is not without its limitations. It can sometimes lead to market failures, such as when there are externalities or when there is an unequal distribution of information among buyers and sellers. In such cases, government intervention may be necessary to correct the market failure and ensure that resources are allocated efficiently.