External factors in governing prices
What are the external factors in governing prices?
Expert
External Factors are as follows:
These factors are ahead of the control of organization. The given are the major external factors.
1. Demand: when the demand for a product is inelastic this is better to fix a higher price and when demand is elastic, so lower price may be fixed.
2. Competition: Number of substitutes obtainable in the market and the extent of competition and the price of competition and so forth is to be considered during fixing a firm price.
3. Distribution channels: Conflicting interest of middleman and manufacturers is one of the significant factors that influence the pricing decision. So, manufacturer would desire that middleman must sell the product at a minimum mark up.
4. General economic conditions: throughout inflation a firm forced to fix a higher price and in deflation forced to decrease the price.
5. Government Policy: when taking pricing decision, a firm has to take in consideration the taxation policy and trade policies of the Government.
6. Reaction of consumers: When a firm fixes the price of its product unfairly high, the consumer might boycott the product.
As per shown in this graph, the average high school graduate will earn around: (1) $12,000 yearly. (2) $20,000 yearly. (3) $45,000 yearly. (4) $90,000 yearly. (5) $100,000 yearly. Q : What did professor Marshall illustrates What did professor Marshall illustrates about Law of Demand? Answer: According to Marshall “the amount demanded raises along with reduces in price and diminish
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