--%>
Assignment Help - homework help

External factors in governing prices

What are the external factors in governing prices?

E

Expert

Verified

External Factors are as follows:

These factors are ahead of the control of organization. The given are the major external factors.

1. Demand: when the demand for a product is inelastic this is better to fix a higher price and when demand is elastic, so lower price may be fixed.

2. Competition: Number of substitutes obtainable in the market and the extent of competition and the price of competition and so forth is to be considered during fixing a firm price.

3. Distribution channels: Conflicting interest of middleman and manufacturers is one of the significant factors that influence the pricing decision. So, manufacturer would desire that middleman must sell the product at a minimum mark up.

4. General economic conditions: throughout inflation a firm forced to fix a higher price and in deflation forced to decrease the price.

5. Government Policy: when taking pricing decision, a firm has to take in consideration the taxation policy and trade policies of the Government.

6. Reaction of consumers: When a firm fixes the price of its product unfairly high, the consumer might boycott the product.

   Related Questions in Managerial Economics

  • Q : Differences between Sunk Cost and

    Illustrates the differences between Sunk Cost and Incremental cost?

    		•
  • Q : Maximizes profit by hiring labor A firm

    A firm maximizes profit through hiring labor at the point where labor’s: (1) marginal physical product equals its average physical product. (2) marginal revenue product equals its marginal resource cost. (3) rate of exploitation is greatest. (4)

    		•
  • Q : States the term Demand Estimation

    States the term Demand Estimation.

    		•
  • Q : Determine shape of total revenue curve

    Within a graph along with output on the horizontal axis and whole revenue on the vertical axis, determine the shape of the total revenue curve for a perfectly competitive seller: w) U-shaped. x) inverted U-shaped. y) a horizontal line

    		•
  • Q : Concept of derived demand The concept

    The concept of derived demand means that: (w) consumer demands for goods depend on the utilities received from their use. (x) firms’ demands for resources depend upon consumer demands for the goods produced. (y) governmental demands for social g

    		•
  • Q : Investment in Human Capital An

    An investment in human capital is most obviously illustrated while: (1) Biff Biceps lifts weights before going to the beach to surf. (2) Cary Coffee drinks four cups of latte before going to work. (3) Pollyanna reads Harlequin Romance novels within he

    		•
  • Q : Illustrates the economies of scale are

    Illustrates the economies of scale are categorization?

    		•
  • Q : Quantity demand declines back and up in

    Suppose that the auto market started at the intersection of S0 and D0, and subsequently higher labor costs drove up prices for latest cars. How will it influence the market for automobiles?: (w) Higher wages for auto workers drive up the total ma

    		•
  • Q : Economic incidence of a tax imposing

    The economic incidence of a tax: (i) identical to its legal incidence. (ii) either forward-shifted to suppliers or backward-shifted to consumers. (iii) imposed on whoever suffers decreased purchasing power because of the tax. (iv) more easily found th

    		•
  • Q : Equilibrium of the consumers of the two

    identify two goods consumed by the majority of the neighborhood communities. Qn. establish the equilibrium of the consumers of the two goods

    		•