Key words Dense plasmas, dielectric function, dynamic structure factor, Mott effect, metal-nonmetal transition. PACS 52.25Mq, 52.27Gr, 52.27Lw, 52.38DxLinear response theory is used to describe the response of a charged particle system to external electromagnetic fields. Properties such as the polarization function, the dynamical conductivity and the absorption coefficient are expressed in terms of equilibrium correlation functions. Many-particle theory is used to treat correlations in the Coulomb system. The systematic inclusion of bound states is shown. Modifications due to the influence of a dense medium lead to the dissolution (Mott effect) of bound states, which is adequately described in terms of the single-particle spectral function.