Big bazar price control on customer

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Big bazar price control on customer

When price rises demand falls but supply increases. At that price where demand and supply both are equal to each other, that price will be determined in the market. We can explain it by following table and diagram. There was a controversy among earlier economists as to whether the supply of a good or the demand for it goes to determine price of a commodity under perfect competition.

Some were of the opinion that it is the marginal utility on the side of demand determines price. Others held that it is the cost of production I.

The marginal cost on the side of supply determines price. But both of them took one-sided view of the pricing problem. I need to give equal importance to both the forces of demand and supply in determining price and output under perfect competition.

Both the marginal utility and marginal cost took part in determining price. I need to compared price determination with the act of cutting with a pair of scissors. Both the blades are necessary for cutting a piece of paper although the lower blade acts, more in actively than the upper blade.

No piece of paper can be cut by the help of individual blades. Thus the price under perfect competition is determined by the twin forces of market demand and market supply.

On the demand side it is buyers and on the supply side it is sellers who take part in the process of determining prize. The buyers are always ailing to offer lower price and the sellers always like to sell at a high price.

Transaction will be effective only when price is acceptable to both the opposite parties. For the better analysis of price determination the demand side and supply side are to be discussed as: The demand curve of a commodity slopes downward.

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This expresses that with the rise in price quantity demanded rises and with the rise in price quantity, demanded falls.

A consumer is always guided by the marginal utility in buying a particular commodity. When the quantity demanded of a commodity rises he will be prepared o pay less and less as the marginal utility of the commodity continues falling.

Thus the price of the commodity is paid accordingly. Below- is given the demand schedule of a commodity. Price and quantity of potatoes are measured along AY-axis and OX- axis respectively. Supply side The supply curve of a commodity usually slopes upward.

Big bazar price control on customer

Law of supply holds that more of a commodity is supplied at high price and less of a commodity is supplied at lower price. Supply depends on the cost of production. The price charged by a seller depends on the marginal cost of production.

Because of the operation of the law of diminishing returns and larger quantities can be produced only at higher prices. The above schedule can be expressed in terms of a supply curve.

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