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Another important element which decides the price is how easily or how difficult is it to get the commodity or the service. Scarce commodities are considered much more important than commodities available in abundance hence there is a significance difference between the prices of scarce commodities and the commodities which are available in abundance. Let us now consider the demand aspect of the price theory, the demand aspect of the price theory is driven by an important factor which is how desperately a consumer is in need of that commodity or service. If a consumer is urgently in need of the service or commodity, he/she wouldn’t mind spending even double the amount of money which they would have spent in normal circumstances. So the demand aspect of the price theory is all about the desire of the consumer to have that particular commodity or service at his/her disposal.
Another important aspect which is very important is the demand curve; demand curve gives a good enough indication of the will of consumers to buy the commodity or the service at that particular price. Demand curve and supply curves are studied by an organization to arrive at an equilibrium price. Equilibrium cost is the fixed cost and this changes only when the demand and supply is changed and it does not change unless the demand and supply changes.
Let us now take into consideration the difference between luxury goods and necessities, the income elasticity of demand tends to be much higher in the case of luxury goods and this is because of a simple reason which is as people become wealthier there wants increase and they tend to spend more money on buying themselves luxuries. The level of income of an individual goes on to decide what luxury is and what is necessity? For instance a rich person can stop buying bikes and as a replacement start collecting cars, this purely depends on the level
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In 2008, two smart lawyers quietly bought up all the firms and began operations as a monopoly called “Wonks.” To operate efficiently, Wonks hired a management consulting firm, which estimated a different long-run competitive equilibrium. The new company is now a “monopoly” which is only the sole provider of potato chip in the entire country.
This essay focuses on the identification of the core differences between microeconomics and macroeconomics. The difference between two fields of economics is primarily related to aggregation. In microeconomics, the decisions of individuals are studied: macroeconomics considers the impact of aggregate decisions of individual agents on the economy
The focus of the Microeconomics is on interactions between buyers and sellers and the factors that influence their decisions. Study of microeconomics deals with the efficient allocation of limited recourses that are available to fulfill unlimited wants of the society. This concepts is known as the basic economic problem. It occurs due to scarcity.
Macroeconomics It deals with the analysis of the entire economy including the issues that have the capability of affecting the economy. The issues related in macroeconomics are unemployment, economic growth, inflation as well as monetary and fiscal policies.
The main forces of the market are the forces of demand and supply. The interaction between these two forces develops the price mechanism in a free market economy. The price mechanism refers to the method interaction occurs between the decision of buyers (consumers that make consumption choices) and sellers (businesses that take decision about allocation of scarce resources among different productive uses).
For example, the product line can be very differentiated or innovative, the appealing marketing campaigns, the exclusivity of the service, and, of course, the price should be maintained lower than competitors. Nevertheless, the lowering of
The reason for this difference is due to electricity theft. However, it is price discrimination because the load of electricity theft is bore only by middle-class residential consumers and not the industrial consumers. The reason why Eskom might be practicing
It then allocates the resources available in the society to many potential uses. It also seeks to understand how national economic policies affect these households and firms.
According to Tietenberg (2006), microeconomic issues regarding the environment come in
Market failure may occur when there is a negative externality that imposes an external cost on the society. The efficient level of coal gas mining for the society is lower than the market quantity. In effect, the
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