When you look at a given item, it shows you both its current for-sale information, as well as the "base price" that you somehow learned in your economics class :) You also can see, if it's a weapon or armor, how this item compares to whatever you are currently wearing or wielding. So that makes it quite easy to see what is a good thing to buy and what is not.

OK, so say you see a sword and it says:
Butter Sword of Bread Slicing
Cost: 150 (200)
Damage 50 (+10)

That means that this sword will cost you 150 at this merchant, but its base price around the world is 200gp. That means some merchants might charge you 250gp to make extra money. This merchant is giving you a deal, maybe because he has an oversupply of them or maybe because you are very charming. Merchants will put a high price on something they only have one or two of, and a really low price on things they have a lot of (like in the real world). So it pays to shop around and find the merchant with the lowest price.

The damage means that this sword's base damage rating is 50. This is 10 better than whatever you are currently wielding. So your current weapon might be a Paper Knife of Folding, only with 40 damage.

This same system holds true with any other stat - be it defense, scariness, attractiveness and so on. It will show you the object's base statistic, and then in ()s it will indicate if this is better or worse than what you are currently using.

Fable Walkthrough