Can someone please recommend a book or a chapter from a book which provides a good and clear explanation of price theory. How prices are determined what they reflect and how they serve as allocaters of resources.
Any decent basic introductionary economics textbook will answer that for you. Principles of economics by Mankiw gives some nice intuition. if you a looking for a little more advanced stuff, try Intermediate microeconomics by Varian.
I really like David Friedman's Price Theory for this material. I feel it really marries the intuition to the math. If you prefer a dead-tree version, you can usually find a used one for a few bucks online.