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Explain the neoclassical arguments that (a) the price of a good reflects how scare it is, and (b) competitive markets are efficient. Make sure that you go through all the supporting concepts, such as the nature of supply and demand, that underpin these a - Essay Example

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Furthermore, demand and supply go on further in determining the scarcity of a good or service. The creation of scarcity, in essence,…
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Explain the neoclassical arguments that (a) the price of a good reflects how scare it is, and (b) competitive markets are efficient. Make sure that you go through all the supporting concepts, such as the nature of supply and demand, that underpin these a
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Extract of sample "Explain the neoclassical arguments that (a) the price of a good reflects how scare it is, and (b) competitive markets are efficient. Make sure that you go through all the supporting concepts, such as the nature of supply and demand, that underpin these a"

Download file to see previous pages The idea behind supply and demand concept is a huge factor when it comes to price and scarcity of goods and services. On the other hand, a competitive market entails a market in which many buyers and suppliers exist, and as a result, there is eradication of the idea of monopoly and creation of competition. A competitive market is efficient since no single entity, be it buyers or suppliers can control or influence the pricing of goods and services to their advantage. Additionally, in a competitive market, the high competition among buyers determines the demand price while the high competition among supplies determines the supply price. This paper is an explanation of the neoclassical arguments that the price of a good reflects how scarce it is, and that competitive markets are efficient.
The price of a good can be classified as being high, low or moderate. The three classifications are highly influence by demand and supply of goods and services in the market. Moreover, the number of sellers and buyers in the market influence the demand and supply of goods and services. A high number of buyers in the market result, in a high demand, while a low number of buyers result in about a low demand. A high number of sellers in the market result in a high supply while a low number of sellers result in a low supply. A price of a commodity will be high when the supply of the commodity will not match up the demand by buyers. Alternatively, a price of a commodity will be low when its supply is higher than its demand thus creating a surplus. A moderate price comes as a result of market equilibrium that is when the supply of commodities equals the demand for commodities. In essence, the price for a good or a service fluctuates according to its supply, and the supply can be scarce, moderate or abundant. In relation to the theory of demand and supply when a market has many suppliers there will be an abundant supply of goods and services and in turn, a competition for buyers ...Download file to see next pagesRead More
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