Whenever we have touched on the pricing of productive factors we have signified the prices of their unit services, i.e., their rents. In order to set aside consideration of the pricing of the factors as "wholes," as embodiments of a series of future unit services, we have been assuming that no businessmen purchase factors (whether land, labor, or capital goods) outright, but only unit services of these factors. This assumption will be continued for the time being. Later on, we shall drop this restrictive assumption and consider the pricing of "whole factors." When all factors are specific there is no principle of pricing that we can offer. Practically, the only thing that economic analysis can say about the pricing of the productive factors in such a case is that voluntary bargaining among the factor-owners will settle the issue. As long as the factors are all purely specific, economic analysis can say little more about the determinants of their pricing. What conditions must apply, then, to enable us to be more definite about the pricing of factors? The currently fashionable account of this subject hinges on the fixity or variability in the proportions of the combined factors used per unit of product. If the factors can be combined only in certain fixed proportions to produce a given quantity of product, it is alleged, then there can be no determinate price; if the proportions of the factors can be varied to produce a given result, then the pricing of each factor can be isolated and determined. Let us examine this contention. Suppose that a product worth 20 gold ounces is produced by three factors, each one purely specific to this production. Suppose that the proportions are variable, so that a product worth 20 gold ounces can be produced either by four units of factor A, five units of factor B, and three units of factor C, or by six units of A, four units of B, and two units of C. How will this help the economist to say anything more about the pricing of these factors than that it will be determined by bargaining? The prices will still be determined by bargaining, and it is obvious that the variability in the proportions of the factors does not aid us in any determination of the specific value or share of each particular product. Since each factor is purely specific, there is no way we can analytically ascertain how a price for a factor is obtained. The fallacious emphasis on variability of proportion as the basis for factor pricing in the current literature is a result of the prevailing method of analysis. A typical single firm is considered, with its selling prices and prices of factors given. Then, the proportions of the factors are assumed to be variable. It can be shown, accordingly, that if the price of factor A increases compared to B, the firm will use less of A and more of B in producing its product. From this, demand curves for each factor are deduced, and the pricing of each factor established.
production and pricing aspects
· The cost of production · The market demand for the product · The desired markup by the business owner
Factors of production
factor pricing means the payments made to various factors of production .for example- land,labour ,capital,entrepreneur gets rent,wages,interest and profit respectively for their contribution in production. under perfect competition supply of labour is perfectly elastic.(i.e. supply curve is drawn parallel to x-axis.). to understand factor pricing ,one needs to get acquainted with marginal productivity theory of production first which states that factors are paid the value of their marginal physical product.price of a factor is determined by its total demand and supply schedules.
The subject matter of microeconomics includes several factors. Some of these factors are commodity pricing, factor pricing, and welfare theory.
production and pricing aspects
Product pricing is the act of giving goods a price to be sold at. This is usually after factoring in various factors like the cost of production so as to make a profit.
What factors usually affect pricing?
· The cost of production · The market demand for the product · The desired markup by the business owner
Factors of production
the pricing of a product is largely depended on the two main factors : - 1. Internal like cost of production profit margin etc 2. External like type of market, general economic conditions, competitors, nature of the product etc.
Discuss factors in pricing general and special attendance on subcontractors?
There are internal and external factors for pricing. The internal factors include the manufacturing or purchasing costs while external factors depend on the demand of a product.
Product line pricing is a pricing strategy that uses one product with various class distinctions. An example would be a car model that has various model types that change with performance and quality. This pricing process is evaluated through consumer value perception, production costs of upgrades, and other cost and demand factors.
what has OPEC done to limit the effect of non member production on its pricing decisions?
factor pricing means the payments made to various factors of production .for example- land,labour ,capital,entrepreneur gets rent,wages,interest and profit respectively for their contribution in production. under perfect competition supply of labour is perfectly elastic.(i.e. supply curve is drawn parallel to x-axis.). to understand factor pricing ,one needs to get acquainted with marginal productivity theory of production first which states that factors are paid the value of their marginal physical product.price of a factor is determined by its total demand and supply schedules.
Mostly competitor external prices affect pricing.