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Week 3 Implications of Market Pricing On Economic Decision-Making (Oct. 4 - 8)

The document discusses market price and how it is determined by the forces of supply and demand in a market setting made up of buyers and sellers. Market price can change quickly as bid and offer prices change. It is the price at which a good or service can currently be bought or sold. Market price is important for economic decision making as it ensures supply equals demand at the equilibrium point and provides incentives for buyers and sellers through price signals in response to changes in supply and demand.

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Paulo bozar
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7K views18 pages

Week 3 Implications of Market Pricing On Economic Decision-Making (Oct. 4 - 8)

The document discusses market price and how it is determined by the forces of supply and demand in a market setting made up of buyers and sellers. Market price can change quickly as bid and offer prices change. It is the price at which a good or service can currently be bought or sold. Market price is important for economic decision making as it ensures supply equals demand at the equilibrium point and provides incentives for buyers and sellers through price signals in response to changes in supply and demand.

Uploaded by

Paulo bozar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Market Price

MP is used to
Is the calculate
current consumer and
price at economic
which an surplus.
asset or
service can
be bough
or sold.
Features of market price
The market price is the current price
at which a good or service can be
purchased or sold.
The market price of an asset or service
is determined by the forces of supply
and demand.
Market price can change quickly as
people change their bid or offer
prices.
The Market Setting
The market is made up of buyers and
sellers making choices under
conditions of scarcity.
The Market Setting

Buyers ask about the types of goods


and services available and the prices
they must pay for them
Competition Competitions
among buyers among sellers
brings the brings the lowest
highest prices price possible
The
opportunity
cost to you
of buying a
hamburger
Php100 is the value
you place on
two hot
dogs

The only price


Php50 that affects
decision is
the relative
price.
CUSTOMERS
3 Important factors

Buyers
perceive the
product
offers value
How How many
sensitive buyers there
they are to are?
changes in
price?
FACTORS THAT AFFECT PRICING DECISIONS
FACTORS THAT AFFECT PRICING DECISIONS
Elasticity refers to the amount of
stretch or change.

FACTORS THAT AFFECT PRICING DECISIONS


COMPETITORS

FACTORS THAT AFFECT PRICING DECISIONS


THE ECONOMY AND GOVERNEMNT
LAWS AND REGULATION
RA 7394 Consumer Act RA 10667 Philippine
of the Philippines of Competition Act (PCA) is
1991, legal basis for the primary competition
consumer protection in policy of the Philippines
the country. The law for promoting and
embodies the state policy protecting competitive
on the protection of market. It will protect the
consumers and establish well-being of consumers
standards of conduct for and preserve the
business and industry in efficiency of competition
the country. in the market place.

FACTORS THAT AFFECT PRICING DECISIONS


PRODUCT COSTS

FACTORS THAT AFFECT PRICING DECISIONS


What happens in a market when the
price is set too high?
When prices are too high there is a
SURPLUS where the quantity
producers are willing and able to
supply is greater than the quantity
demanded. More product is
available than people are willing
and able to buy at that price.
Why is market pricing an important
economic decision making?
At the equilibrium point, the market
price for a given good ensures that the
quantity of goods supplied is equal to
the number of goods demanded. ...
Both economists and companies
analyze the relationship between
supply and demand when making
strategic product decisions.
How does market price affect economic
decisions?
On the flip side, demand in this context
is the desire of consumers for a specific
product. ... The law of supply states that
the market price decreases as the
supply offered increases. The law of
supply is a primary example of how
pricing can affect decision making with
producers.
How do market prices affect the
economic decision making of buyer
and seller?
Prices send signals and provide
incentives to buyers and sellers. When
supply or demand changes, market
prices adjust, affecting incentives.
Higher prices for a good or service
provide incentives for buyers to
purchase less of that good or service
and for producers to make or sell more
of it.

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