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Home Price and Output Determination Under Perfect Competition Price Determination Under Perfect Competition

Price Determination Under Perfect Competition:

Definition and Explanation:

Dr. Alfred Marshall was the first economist who pointed out that the pricing problem should be studied from the view point of time. He distinguished three fundamental time periods in the determination of price:

 

(1) Market price.

 

(2) Short run normal price.

 

(3) Long run normal price.

 

Marshall has stated that it is wrong to say that demand alone or supply alone determines price. It is both demand and supply which determine price. In the words of Marshall:

 

"The shorter, the period which one considers, the greater must be the share of our attention which is given to the influence of demand on value and longer the period, the more important will be the influence of cost of production on value".

 

Actual value at any time the market value as it is often called is often influenced by passing events and is short lived than by those which work persistently. But in the log run, these fitful and irregular causes in a large measure efface one another influence so that in the long run persistent causes dominate value completely. Stiller is right when he says that Marshall has done a great service to economics by introducing time element in pricing.

Relevant Articles:

Market Structure
Perfect Competition
Equilibrium of the Firm
Short Run Equilibrium of the Price Taker Firm
Short Run Supply Curve of a Price Taker Firm
Short Run Supply Curve of the Industry
Long Run Equilibrium of the Price Taker Firm
Long Run Supply Curve For the Industry
Price Determination Under Perfect Competition
Market Price
Determination of Short Run Normal Price
Long Run Normal Price and the Adjustment of Market Price to the Long Run Normal Price
Distinction/Difference Between Market Price and Normal Price
Interdependent Prices
Joint Supply
Fixation of Railway Rates

Composite or Rival Demand

 

Principles and Theories of Micro Economics
Definition and Explanation of Economics
Theory of Consumer Behavior
Indifference Curve Analysis of Consumer's Equilibrium
Theory of Demand
Theory of Supply
Elasticity of Demand
Elasticity of Supply
Equilibrium of Demand and Supply
Economic Resources
Scale of Production
Laws of Returns
Production Function
Cost Analysis
Various Revenue Concepts
Price and output Determination Under Perfect Competition
Price and Output Determination Under Monopoly
Price and Output Determination Under Monopolistic/Imperfect Competition
Theory of Factor Pricing OR Theory of Distribution
Rent
Wages
Interest
Profits
Principles and Theories of Macro Economics
National Income and Its Measurement
Principles of Public Finance
Public Revenue and Taxation
National Debt and Income Determination
Fiscal Policy
Determinants of the Level of National Income and Employment
Determination of National Income
Theories of Employment
Theory of International Trade
Balance of Payments
Commercial Policy
Development and Planning Economics
Introduction to Development Economics
Features of Developing Countries
Economic Development and Economic Growth
Theories of Under Development
Theories of Economic Growth
Agriculture and Economic Development
Monetary Economics and Public Finance
History of Money

 

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