What is an Arm's Length Price?

Price is the quantity of currency required per unit of commodity when the commodity is exchanged with currency. In other words, price is unit value (unit price). Price is the transformation form of the exchange value of commodities in the process of circulation. In the process of economics and business, price is a value figure set for goods, services and assets in the form of currency. In microeconomics, price is one of the important variables in the process of redistributing resources between demand and suppliers.

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Scaling function

Performance goods

The role of price is a manifestation of the role of the commodity exchange law, and it is the realization of price itself

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Price theory mainly has

The so-called price elasticity is the elasticity of demand and price. It refers to the sensitivity of the corresponding change in the demand for a product when the price of a product changes. The price elasticity analysis is to use the principle of elasticity to analyze, calculate, forecast and make decisions on the degree of reaction of product demand to price changes.

Price elasticity indicates the dependence of supply and demand on price changes, and reflects the corresponding rate of change of supply and demand caused by price changes, that is, the sensitivity of supply and demand to price information. Factors such as the price of the product itself, consumer income, the price of alternatives, and consumer preferences all affect the demand for commodity consumption. Price elasticity means that these factors remain

Under the same circumstances, changes in the quantity of demand caused by changes in the price of the commodity itself. In the case of demand elasticity, price reductions will cause a corresponding increase in purchases, which will increase the consumer's monetary expenditure on this commodity; on the contrary, price increases will cause consumers' monetary expenditure on this commodity to decrease. In the case of demand elasticity equal to 1, the price reduction will not cause consumers to change the monetary expenditure of this commodity.

Price elasticity depends on factors such as the number of substitutes for the product and the degree to which it is associated (ie, substitutable), the importance of the product in the buyer's budget, and the purpose of the product. Price elasticity is mainly used in corporate decisions and government economic decisions.

Price elasticity refers to the ratio between the percentage change in the sales volume of a product and the percentage change in its price. It is a sensitivity index to measure the quantity change caused by price changes. When the coefficient of elasticity is 1, the increase in sales volume and the decline in price are offset. When the elasticity between 0 and 1 means that the rise in prices will also increase the returns, and the decline in prices will reduce the returns. We say that the demand for such items is relatively inelastic, or the price is not sensitive. The elasticity of demand for most foods is low, while the elasticity of demand for most luxury goods, such as perfumes and high-end clothing, is relatively high.

Calculation formula of elastic coefficient: = Q / P = P × dQ / Q × dP