Supply, Demand, & Pricing of Product or Service

Supply, Demand, & Pricing of Product or Service

Introduction

The demand and supply are the main economic factors which determine the prices of products and services. The prices are set according to the intercession of demand and supply. This paper discusses the demand and supply and its impact on prices of labor. The employment volatility is also explained along the course of discussion. The influence of these factors on labor provides the information on other related concepts caused by the affect of these factors such as inflation and recession. The article under consideration for the evaluation of supply, demand, and price is “Labor Demand, Labor Supply, and Employment Volatility*”, by Robert E. Hall (Hall, 1991).

Discussion

The article “Labor Demand, Labor Supply, and Employment Volatility*”, by Robert E. Hall discusses the various aspects and perspectives of demand and supply in labor market along with the impact of fluctuations causing shifts in prices (Hall, 1991). The elasticity of labor due to the supply and demand also changes. It is stated in the comparison that the wages or price of labor rises when the demand increases while the supply remains constant. Similarly, the price of labor decreases if supply increases or demand decreases. The problems arise due to external forces acting upon the elasticity. The substitutes can also lead to shift in prices of products and services.

There are various issues and challenges faced in determining the pricing strategy of the product. Several advantages can be gained by effective manipulation of these factors to achieve benefits such as economies of scales. Economies of scale refer to the reduction in per unit cost of product resulting from large scale production operations and supply. This is the cost advantage that organization achieves as a result of mass production. Firms highly benefit ...