What determines the price of a product?
The price of a product is determined by the law of supply and demand. Consumers have a desire to acquire a product, and producers manufacture a supply to meet this demand. The equilibrium market price of a good is the price at which quantity supplied equals quantity demanded.
What are the three factors that influence pricing?
The main determinants that affect the price are:
- Product Cost.
- The Utility and Demand.
- Extent of Competition in the market.
- Government and Legal Regulations.
- Pricing Objectives.
- Marketing Methods used.
What are the 2 factors that influence market price?
Fundamentally, demand and supply in the market influence share price.
What are the factors affecting price?
Factors that affect the market price of goods include supply, demand, competition and substitutes. Depending on the market, there could be other factors such as currency exchange rates, environmental concerns and political instability.
What factors influence price elasticity?
There are 4 factors that influence the price elasticity of demand: – The availability of substitutes. – The specific nature of the good. – The part of income spent on the good. – The time consumers have to buy the good. Choose a product you have purchased in the past month from a clothing or shoe store.
What factors affect supply and demand?
Thus, some key factors affect demand and supply. Key factors affecting supply include the price of a good or service, technology, income, taste and preferences of consumers, price of other goods (mainly substitutes), government actions and the amount of information available on the good or service.
How does competition affect price?
The effect of the competition of price shifts the balance between supply and demand. For example, given an equilibrium quantity, when the price is high, this results to a surplus of quantity. Competition on price makes the market productive and the consumers get to choose many options.