Price

In economics, price is the exchange rate between goods. money serves i. i.e. R. as a reference for the price. The market price, or equilibrium price, is the result of supply and demand in a free market.

Pricing: Prices are determined in the market by the coincidence of supply and demand. An increase in supply causes prices to fall while demand remains the same, and an increase in demand causes prices to rise while supply remains the same. Supply and demand determine the level of the price and are themselves retrospectively influenced by the prices. When many suppliers and buyers face each other in a perfect market, the so-called equilibrium price is formed. This is the price at which the quantity of goods supplied and the quantity demanded are equal.

The intensity with which the price reacts to supply and demand is called price flexibility. Its reciprocal is the price elasticity. In addition, the prices of competing goods affect the price level.

The prerequisite for the development of market prices is free competition. Monopolies try to use their dominant market position to push through higher prices (monopoly prices) or to set different prices for other groups of buyers (price differentiation). In a planned economy, prices are set by the authorities. Fixed government prices do not automatically balance supply and demand. Additional measures to control production and consumption through pricing policy are required here.