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Theory of price

Theory of price

 According to the theory of price, which is a branch of economics, the cost of any commodity or service depends on how its supply and demand are matched.

The price at which all of the available goods can be reasonably consumed by potential customers is known as the optimal market price.

Equilibrium in the market is defined as the point at which supply and demand are in balance.

Raw material availability and competing items, as well as an item’s perceived value and consumer market affordability, can both have an impact on supply and demand.

According to the theory of price, commonly known as “price theory,” the forces of supply and demand in the market will always determine the appropriate price for a given commodity or service.

In a free market economy, producers normally seek to charge the most amount that is reasonable for their goods and services, while consumers want to pay the least amount possible to buy them. The two sides will eventually come together due to market forces at a price that both consumers and producers are ready to accept.

The market is said to be in equilibrium when the amount of an item or service that is offered equals the demand from potential customers. Price modifications are possible as market circumstances change thanks to the idea of price theory.

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