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Prices

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by

Raquel Ramirez

on 4 March 2014

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Transcript of Prices

Understanding equilibrium
S<D
(deficit or shortage)
P increases to decrease
D and produce more goods

P
Measures the effect that a change in one variable (price or income) has in other variable (quantity demanded or supplied)

Defining Prices
The prices in the market englobe two lmits: that maximum possible,defined by what consumers are willing to pay AND the minimum the producer based on production costs and profit margin, is willing to sell.

Usually, different prices exist in the market, within limits. In the measure that consumers and producers get to know the market, Prices tend to fixate on a central value that can be estimated by statistics (tienden a fijarse entorno al valor central que puede ser estimado por métodos estadísticos).

Supply and demand curve
Market, prices and value.
The market is where demand and supply meet and exchange for economic operations.
This exchange has a certain number of suppliers and demands, a system of competition, a flow of information, and a system of regulation,

The supplier that sells his product at the highest level, will sell it less quickly...id his product is no different from his competitors, than he will only sell if his competitors have sold all of theirs, and the demand i the market has yet to be satisfied.
Value consists of two parts:
First is objective and corresponds the producers, whom determines if it is convenient to produce and sell certain goods and services.
Second is subjective and corresponds to the consumer evaluating the goods it wants to buy, based on its utility and the level of satisfaction it provides.
Prices are based on the need to negotiate a series of proposed prices, the suppliers offer and the demands offer. Supplier=wants the highest price possible; the demand side wants the lowest.
Supply (Oferta) is influenced by the following factors:
The intersection of supply and demand reached and equilibruim (equilibrio)
When supply exceeds demand, prices decrease.
When demand exceeds supply, prices increase.

Demand (D):
Relation showing how much of a good the consumer is willing to buy at a certain price in a certain time

Supply (S):
Relation showing how much of a
good the producer is willing to sell at a certain price in a certain time

-Changes in technology
-Price and availability of raw materials
-Number of producers
Expectations of producers

--
S>D
(superavit or surplus)
P decreases to increase
D and sell the extra products

Elasticity
Factors influencing the price elasticity of the demand:
How much you need the product…
How easy is it to find a substitute for that product…
Number of items you need to fulfill your necessity…
If it is a long lasting product…
The money you spend in the product…
Full transcript