The Determinants of Factors of Price

Prices in a market economy are very important. Price allows us to give out goods appropriately to those who are able to pay.

Fiscal policy is often linked with Keynesianism (Michael Smith, Investpedia), which is derived from British economist John Maynard Keynes. Theories of Keynesianism have been used over time as they are popular and specifically applied to assuage economic downturns. The principle behind fiscal policy is influencing the level of aggregate demand in the economy to achieve economic factors of stabilizing the price, full employment and economic growth. Fiscal Policy is a government’s decision regarding spending and taxing. If a government wants to increase or restore growth in the economy, Spending rises. More items are purchased in spite of sticky prices, because of this the firm increases output.

Fiscal policy is used by the federal government to direct the economy. Fiscal policy can affect borrowing and the size of an organization’s tax bill. The amount of spending that the government makes directly affects the economy. The spending can also enhance growth within the economy by increasing funds available for organizations to fund capital expenditures.

The aim of this paper is for understanding how market works in practice, what is price mechanism and how does it work in market system. What is the role of demand, supply and equilibrium, what happens when price mechanism doesn’t work properly? I will try to explain conditions of the demand, supply and law of demand and supply. I will compare partial and general equilibrium which was Marshall and Walras theories.

Fiscal policy is the use of a government’s taxing, debt, and spending authority for the purpose of influencing economic growth. Congress and the president share responsibility for economic policy with the Federal Reserve (Hubbard & O’Brien, 2011, p. 929). The government can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending (Hubbard & O’Brien, 2011). The government uses fiscal policy to make changes in government purchases and taxes, to achieve policy goals. The price level and the levels Gross Domestic Product and total employment in the economy rely on the collective demand and short term aggregate supply. The government can both aggregate demand and collective supply through fiscal policy (Hubbard & O’Brien, 2011, p. 900). Fiscal policies can influence the economy’s production and employment.

Priced Bills of Quantities provide a basis for variations to be priced at tendered rates.

In microeconomics, the market supply and demand rely on competitors and prices. Market equilibrium is one of the most important concepts in the study of economics. “Market equilibrium is a market state where the

Assuming there is pure competition in the market place, and no government intervention, we are able to focus on how the price mechanism determines the equilibrium price in the market. Markets can be effective at resolving the basic issues of what and how much to produce at a certain price level although left to operate on its own, the market can still create unsatisfactory outcomes. When markets do not produce the desired outcome, it is known as market failure and when this occurs, governments may intervene in the market.

Fiscal Policy involves the use of changes in government spending and taxations to influence the level and composition and aggregate demand in the economic and giving the amount involve is clearly as important implications for business

Price is a source of income and profit for all type of businesses. After product, deciding price is a step which play an

All sales of the first party products to the second party (the distributor) shall be made pursuant to this contract at the prices and the terms the first party set. All the prices are FOB manufactures or a second party own warehouse location, if it’s not opposes the agreement.

In perfect competition, both buyers and sellers can’t influence the market price by increasing/decreasing their purchases/output. This means that the price of products is determined by taking into account two market forces, namely market demand and market supply.

The main costs of production are raw materials, research and development, manufacturing of the product – wages, shipping, advertising and retail costs. Management will look at all of these factors and will try to get the best quality for the lowest price. They will need to predict the implicit and explicit cost and outcomes of the choices they make. The choices of what to pay for raw materials are very important. For example, the upside of buying cheap materials will mean less economic costs. However, the consumer might see a drop in quality of the good and buy less, leading to decreased profit. A balance must be found. R & D for a product is crucial to its success in the market. Constant development updates and improvements of a product will widen its life cycle in the market. A firm 's location is a big factor of costs. Needs of the firm such as infrastructure, a labour force and machinery costs have to be factored into decision making.

It is reported that tendering and post tender negotiation are primary components of management of purchasing and supply. According to CIPS conduction of the post, tender negotiation process should be the responsibility of the purchasing professional and as such, those individuals should participate in the necessary training programs to effectively do so. Post-tender negotiation when it is ethical and professional is held as an appropriate method of securing value for the money spent. It is recommended by CIPS that bid clarification "detailed discussion about the offer should usually comprise the final stage after receipt of tenders and before contract award; it will normally lead to improved value being obtained." (CIPS, 2013)

When we study Price in detail, it becomes apparent that price is influenced or constructed by various factors. For instance, in a perfect market system, where there are number of buyers and sellers and both sellers and buyers have required market information, not only a uniform price will prevail, but also the quantity demanded will be highly price-elastic.