Petroleum Products : Pricing Principles
: Economic Theory:
formation a fair outlay
The mansion of economic surmisal has galore(postnominal) rooms, and like many other economic theories, thoughts and concepts there is no general agreement amongst economists on what a fair price is or even what the correct measure of economic jimmy is. Economists agonised for many years about the differences between the look on-in-use and measure-in-exchange of convergences. determinate economists like David Ricardo held a greet based theory of value whilst, simplistically, Marxist economists predominantly adhere to a labour theory of value postulating that a fair price of a product is equal to the value that labour has added to it[1].
The cost-of-production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it (a theory of value is an news report of what determines the prices of commodities and services). The cost can compose any of the factors of production (including labour, capital, or land), raw materials and taxation. In particular, it is the marginal value and the marginal cost of the last unit traded that jointly determine a price.
In agonistic markets the price of a good or a service should equal its marginal cost of production[2].
For Neo-classical economists, the fair value of a good or service is given by its competitive market price, which is the counterpoise price that would result from the forgo interaction of occupy and supply in a competitive market.[3] Theoretically, the free interaction of demand and supply can be described as follows:
Begin in a determine of short run and long run equilibrium[4] and suppose that demand increases (due to, for example, an increase in income). In the short run there is an immediate move to a new increased equilibrium price where the new quantity demanded equals the quantity...If you want to get a full essay, order it on our website: Ordercustompaper.com
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