commentary about how the quality and price factors were determined. course hero

Why are prices and price relationships constantly changing?

What is the factor of production?

How does the higher price affect the average yield per acre?

Why do foreigners object to higher prices?

How do prices affect production?

Is government price control harmful?

Is a fixed price unreasonable?

See 4 more

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Price Determination: 6 Factors Affecting Price Determination of Product

(d) Attaining Product Quality Leadership: Generally, firm charges higher prices to cover high quality and high cost if it’s backed by above objective. 6. Marketing Methods Used: The various marketing methods such as distribution system, quality of salesmen, advertising, type of packaging, customer services, etc. also affect the price of a product.

How Prices Are Determined | Mises Institute

Then, they both have improved their situations and satisfied their value scales so far as this problem goes. Under these assumptions, no further trades are possible, because there is no advantage to be gained from any other transaction.

How Price of a Good is Determined in the Market? - Economics Discussion

As a result, they would be willing to accept a lower price, and p would be falling. As p falls from p 2, supply would fall and demand would rise, leading to a fall in excess supply.This would go on till p falls to the level of p 0 and the market equilibrium is restored.. It is discussed above how the price is determined in a perfectly competitive market through the process of interaction ...

Factors to Determine Price of Goods or Services - UKEssays.com

key economic factor to determine price of good or service and circumstances that will enable the company to pass on cost increase to customer and protect profit margin (1750 words) price determination

Why are prices and price relationships constantly changing?

Because the desire and need for, and the supply and cost of, every individual commodity or service are constantly changing, prices and price relationships are con­stantly changing. They are chang­ing yearly, monthly, weekly, daily, hourly.

What is the factor of production?

One general factor of production, labor, can be diverted, in the short run or in the long run, directly or indirectly, from one line into any other line. If one commodity goes up in price, and consumers are unwilling or unable to substitute another, they will be forced to consume a little less of something else.

How does the higher price affect the average yield per acre?

But the higher price gives an in­centive to producers to increase their average yield per acre by planting the supported product only on their most productive acres, and by more intensive em­ployment of fertilizers, irrigation, and labor.

Why do foreigners object to higher prices?

Foreigners object to paying the higher price. They cut down their purchases of the valorized commodity from the val­orizing country, and search for other sources of supply. The higher price gives an incentive to other countries to start producing the valorized commodity.

How do prices affect production?

Let us begin on the elementary level and say that prices are de­termined by supply and demand. If the relative demand for a prod­uct increases, consumers will be willing to pay more for it. Their competitive bids will both oblige them individually to pay more for it and enable producers to get more for it. This will raise the profit margins of the producers of that product. This, in turn, will tend to attract more firms into the manufacture of that product, and induce existing firms to invest more capital into making it. The increased production will tend to reduce the price of the product again, and to reduce the profit margin in making it. The in­creased investment in new manu­facturing equipment may lower the cost of production. Or—par­ticularly if we are concerned with some extractive industry such as petroleum, gold, silver, or copper—the increased demand and out­put may raise the cost of produc­tion. In any case, the price will have a definite effect on demand, output, and cost of production just as these in turn will affect price. All four—demand, supply, cost, and price—are interrelated. A change in one will bring changes in the others.

Is government price control harmful?

Very well, someone may say; so government price control in many cases is harmful. But so far you have been talking as if the market were governed by perfect compe­tition. But what of monopolistic markets? What of markets in which prices are controlled or fixed by huge corporations? Must not the government intervene here, if only to enforce competition or to bring about the price that real competition would bring if it ex­isted?

Is a fixed price unreasonable?

Even a fixed price or price relationship that may be "right" or "reasonable" on the day it is set can become increasingly unreasonable or un­workable. What governments never realize is that, so far as any individual commodity is concerned, the cure for high prices is high prices.

What are the factors that determine the price of goods?

Other factors such as the price of substitute goods, price of related goods, government policies, competition in the market, etc. also play an important role in the determination of the prices.

What is the purpose of the determination of prices?

Introduction to Determination of Prices. Determination of Prices means to determine the cost of goods sold and services rendered in the free market. In a free market, the forces of demand and supply determine the prices. The Government does not interfere in the determination of the prices. However, in some cases, the Government may intervene in ...

What happens when the price rises above the equilibrium price?

Similarly, when the price rises above the equilibrium price, the demand decreases and supply increases. There arises a surplus of goods which in turn decreases the price to equilibrium price.

What is the price that makes demand equal to supply?

The price that makes demand equivalent to supply is called the equilibrium price. Graphically, it can be said that the equilibrium price is the point where the demand curve and supply curve intersect. It is the price at which there is no unsold stock left neither is any demand unfulfilled. Thus, it is also known as the market clearing price.

What happens to equilibrium once price and quantity are reached?

Once the Equilibrium price and quantity are reached, we attain Stable Equilibrium. Stable equilibrium adjusts any disturbance in the demand and supply and restores the original equilibrium.

What is the value of a price?

Price is the worth that buys a finite amount, weight, or another match of goods or services. In other words, it also expresses the value of the goods produced and the services rendered by factors of production such as land, labor, and capital. Thus, the determination of prices is of great significance in an economy.

What are the factors that affect the price of an item?

Another consistent factor, affecting the price of an item for consumption or service is the pricing objectives. Profit Maximization, Obtaining Market Share Leadership, Surviving in a Competitive Market and Attaining Product Quality Leadership are the pricing objectives of an enterprise. By and large, firm charges higher prices to cover high quality and high cost if it’s backed by the above objective.

What are the factors that affect the final price of a product?

A marketer in the course of setting a product or service’s final price is affected by such as internal, external factors – objectives, cost, supply, demand, government regulation, and so forth.

When is the price set to a higher limit?

It is a general concept that when the demand is high in the market the price is set to a higher limit and when the demand is low the price is set to a lower limit by an expectation of adequate demand in the future. However, a marketing manager should critically analyze these factors that may impact the product’s demand.

How does a supplier affect the price of a product?

Supplier’s Characteristics: Suppliers also affect the price of the product since the price charged by suppliers on their raw materials has a direct effect. If the supplier’s raw materials price is high, the price of the product definitely will be high, and if the raw materials price is low, the price of the product may become cheaper.

How many pricing objectives are there?

Since the pricing objectives are mainly of three, a well-defined firm’s pricing objectives depend upon the expectations. It is,

How does the nature of the product affect the selection of price limits?

For example, the luxurious and service-oriented products, the profit margin will be adequately high and for less essential items and less expensive products, the profit margin will be comparatively low.

Why do new firms enter the market?

New firms may enter the market when they feel that there are substantial profits to be made.

Why do consumers not compare prices?

And, for the differentiated products, usually, consumers do not compare price, because they know the attributes used in such products are unique. For example, consumers have to pay different prices for different brands of soap although they are all used for identical purposes.

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Why are prices and price relationships constantly changing?

Because the desire and need for, and the supply and cost of, every individual commodity or service are constantly changing, prices and price relationships are con­stantly changing. They are chang­ing yearly, monthly, weekly, daily, hourly.

What is the factor of production?

One general factor of production, labor, can be diverted, in the short run or in the long run, directly or indirectly, from one line into any other line. If one commodity goes up in price, and consumers are unwilling or unable to substitute another, they will be forced to consume a little less of something else.

How does the higher price affect the average yield per acre?

But the higher price gives an in­centive to producers to increase their average yield per acre by planting the supported product only on their most productive acres, and by more intensive em­ployment of fertilizers, irrigation, and labor.

Why do foreigners object to higher prices?

Foreigners object to paying the higher price. They cut down their purchases of the valorized commodity from the val­orizing country, and search for other sources of supply. The higher price gives an incentive to other countries to start producing the valorized commodity.

How do prices affect production?

Let us begin on the elementary level and say that prices are de­termined by supply and demand. If the relative demand for a prod­uct increases, consumers will be willing to pay more for it. Their competitive bids will both oblige them individually to pay more for it and enable producers to get more for it. This will raise the profit margins of the producers of that product. This, in turn, will tend to attract more firms into the manufacture of that product, and induce existing firms to invest more capital into making it. The increased production will tend to reduce the price of the product again, and to reduce the profit margin in making it. The in­creased investment in new manu­facturing equipment may lower the cost of production. Or—par­ticularly if we are concerned with some extractive industry such as petroleum, gold, silver, or copper—the increased demand and out­put may raise the cost of produc­tion. In any case, the price will have a definite effect on demand, output, and cost of production just as these in turn will affect price. All four—demand, supply, cost, and price—are interrelated. A change in one will bring changes in the others.

Is government price control harmful?

Very well, someone may say; so government price control in many cases is harmful. But so far you have been talking as if the market were governed by perfect compe­tition. But what of monopolistic markets? What of markets in which prices are controlled or fixed by huge corporations? Must not the government intervene here, if only to enforce competition or to bring about the price that real competition would bring if it ex­isted?

Is a fixed price unreasonable?

Even a fixed price or price relationship that may be "right" or "reasonable" on the day it is set can become increasingly unreasonable or un­workable. What governments never realize is that, so far as any individual commodity is concerned, the cure for high prices is high prices.

Introduction to Determination of Prices

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Determination of Equilibrium Price

Solved Example on Determination of Prices