Principles of Microeconomics



Principles of Microeconomics

1)

Prices in a Modern Competitive Market Economy

Price is one of the control mechanisms of market economy and reflects the pattern of economic development and the situation on the commodity market. At the same time the price - a key indicator for each company, since it determines the amount of revenues and profits, i.e., the financial well-being. Issues of pricing and pricing are studied in different disciplines: economics, marketing, economics, each of which considers its specific aspects of the price. This is due to a wide range of activities - the price is one of the difficult economic categories, control and marketing activities affect economic performance. The proposed book is devoted to practical pricing, and it does not explore deeply and fully the theoretical foundations of price, the laws of supply, demand and their role in shaping the market equilibrium price, market approaches to determination of pricing strategy and policy of the company, because these issues are the subject of the study of other disciplines. It highlights the processes related to pricing in various industries. Feasibility of consideration due to the need to develop in students a broad outlook on pricing, which involves an understanding of the laws of this process at all stages of the movement of goods, including in the area where the foundations are laid for money (Friedman, 1962).

The role and importance of price in a market economy

In a controlled directive (Planning Administration), the economy prices are used as an external regulator, the tool impact on the economic processes of the state: they were the object of planning and established a central government bodies; were uniform across the country, are constant and varied only by the government, the price level was divorced from the real value of goods and on world prices. Thus, the price is second only to plan and performed a purely computational functions, served as a tool for accounting, since the State itself defined the level of prices and controlled the dynamics of their changes (Frank, 2004).

Price is an element inherent in any type of economy based on commodity-money relations as well as mediates them, but the prices are formed and operate in different systems in different ways. Since the price is one of the levers of control processes in the economy, it is closely related to the type of management - pricing methodology, properties, functions and prices correspond to the mechanism of operation of the control system. In a market economy system, every company and its owners themselves take all the production and economic decisions: what, where, when and how much to produce, to whom, at what price and on what terms to sell. Relationships between businesses free, so the labor, material and financial resources (as part of the total resources of the society) are included in the manufacturing process of the owners of businesses, respectively, they are responsible for all decisions and actions. The mechanism of regulation of enterprises based on the use of economic methods, such as ...