--%>
Assignment Help - homework help

External factors in governing prices

What are the external factors in governing prices?

E

Expert

Verified

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.

   Related Questions in Managerial Economics

  • Q : Moral Hazard and Efficiency Wages

    Firing a worker who regularly goods off and calls in sick may not resolve the moral hazard problem of shirking when: (w) there is a high probability which the worker will sue the firm. (x) the local unemployment rate is high. (y) average worker productivity is low. (z

    		•
  • Q : Economic incidence of a tax imposing

    The economic incidence of a tax: (i) identical to its legal incidence. (ii) either forward-shifted to suppliers or backward-shifted to consumers. (iii) imposed on whoever suffers decreased purchasing power because of the tax. (iv) more easily found th

    		•
  • Q : Coupon Electrical utility is offering a

    Electrical utility is offering a security, known as zero coupon bond for sale. The terms of the security are investors pay 2337.57 today to purchase the security and the utility will pay the owner of the security 10000 in ten years time. The government is offering a similar security; except that thi

    		•
  • Q : Economic Capital and Per Capita Income

    The Black Plague which killed millions of medieval Europeans probably mainly directly and instantly resulted in: (1) Greater trust on the mercantilist economic theory. (2) Higher standards of living for survivors. (3) More positive attitudes of early Christian theolog

    		•
  • Q : What are the types of business cycle

    What are the types of business cycle?

    		•
  • Q : Regression-Correlation statistical

    Illustrates the Regression and Correlation statistical method of Demand Forecasting?

    		•
  • Q : Negatively bending Labor Supplies An

    An individual’s labor supply curve is negatively sloped that is backward-bending into a range of wages while the: (i) demand for goods exceeds the demand for leisure. (ii) worker offers more hours of labor while the wage rate in

    		•
  • Q : Occupational Licensing The capability

    The capability of otherwise qualified workers to involve in particular careers or enter specific professions is probably most inhibited from: (1) occupational licensing. (2) wage discrimination. (3) segregation in our school system. (4) union labor contracts. (5) scre

    		•
  • Q : Increases in orders for new capital A

    A change in a derived demand is best demonstrated while there are increases in: (1) sales of roasted peanuts during baseball season. (2) new car sales during economic downturns. (3) orders for new capital throughout economic booms. (4) beef prices when cowboys unioniz

    		•
  • Q : Value of the Average Product Hulk is a

    Hulk is a fitness counselor who coaches five clients at a time during exercise groups at Beefcake Body Builders. Hulk’s hourly wage is of $17, and Beefcake charges his clients $20 for every hour-long conditioning session. Therefore average value of produ

    		•