What is the price theory?
Price theory is an economic concept that defines how or why the consumer will buy good or service from a particular company. In order to take place, the Company and the consumer must agree on the price of an item that is by its very nature associated with the value of the product. The price and value are two important factors for the movement of goods or services on the economic market. The price theory may also include external factors such as the number of competing products, aggregated consumer demand and the size of the overall economic market. This chart helps companies to understand what price they will sell most goods or services and thus maximize their financial revenues. On the right angle graph, the horizontal line is the price and vertical represents the amount. The menu curve starts from the lower left corner and the slope up to the right. The demand curve starts in the upper left corner and descends down and right. The penetration of these lines is known as the equilibrium point where the company and the consumer agree on the price of the product.
The supply and demand graph suggests that, according to the price theory, companies are more willing to increase the offer at higher prices because the profits are higher. However, consumers are usually not willing to pay high prices for goods it considers small without value. On the contrary, demand is high when prices are low, although some companies are not willing to sell many goods of this nature due to low profits.
The number of competing products on the economic market can affect theory or price. Competitive companies will try to underline other companies by offering similar goods at a lower price, which in turn moves the equilibrium price of FNEBO goods and services. Companies offering lower or replacement products can also move the market from the brand name.
Consumer demand and the size of the overall economic market also affect the price theory. Consumers who are not willing to buy good or service forcing SPOlečnosti reduce the price of the item until consumers consider it sufficiently valuable to buy at a specific price. For example, a company that produces pots can find that consumers are more interested in pelvis. Too many pots for a high price usually lead to smaller or no sales of the company. The company must reduce the price of their pots to the point where consumers are willing to buy them and try to reconsider their production strategy.