In five pages this paper discusses price theory in terms of definition and how the government both regulates and contributes to the market demand of the economy. Five sources are listed in the bibliography.
Name of Research Paper File: TS14_TEpricth.rtf
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is not simply to determine the process goods may be sold at, but also the way in which many business decisions may be made, such as how profit may be
optimised or production undertaken in the most efficient manner. The scope and range of price theory is much broader than is often attributed to the subject. For any good
or service in an economy there will be a demand factor. This can be divided into two main types of demand; private demand, this is the demand for individuals or
organisation that are non government. The totem market for the good will be the private plus the government demand. The understanding of the government on price theory need to be
understood and demand for a good or service will have an overall impact. If the government increased the demand for a good this will drive the price up, with a
result price increase and lowering of demand in the private sector. The opposite effect will be seen when there is a lower demand from the government, this will create a
fall in prices and the demand from the private sector is likely to increase as prices come down. The determination of supply and demand is often shown as a
graph. The demand line is that which shows the quantity demanded by the consumer will increase as the price decreases. For example, if a clock radio is sold at 20
fewer people will want to buy it then if it was sold at 5. However, with government demand there is likely to be a demand that will remain the same
regardless of the price. This creates a demand curve that is steeper. The private and the government demand as shown below, in figure 1 Figure 1; Private