What is administered inflation?
An administered price is defined as the price of a product or service that is set consciously by an individual producer or group of producers, and/or can be determined or influenced by the government, without reference to market forces. …
What do you mean by administrative price?
An administered price is the price of a good or service as dictated by a government or centralized authority, as opposed to market forces of supply and demand.
Who determines administered price?
Administered price, price determined by an individual producer or seller and not purely by market forces. Administered prices are common in industries with few competitors and those in which costs tend to be rigid and more or less uniform.
What are the three economic questions all societies must answer?
Because of scarcity every society or economic system must answer these three (3) basic questions:
- What to produce? ➢ What should be produced in a world with limited resources?
- How to produce? ➢ What resources should be used?
- Who consumes what is produced? ➢ Who acquires the product?
What do you mean by predatory pricing?
What is Predatory Pricing? A predatory pricing strategy, a term commonly used in marketing, refers to a pricing strategy in which goods or services are offered at a very low price point, with the intention of driving out competition and creating barriers to entry.
What are examples of price discrimination?
Examples of forms of price discrimination include coupons, age discounts, occupational discounts, retail incentives, gender based pricing, financial aid, and haggling.
Is destroyer pricing illegal?
Destroyer pricing is used to eliminate competition. It involves a business setting a very low price in order to attract customers away from competitors, who will struggle to match the low price and may go bust. Destroyer pricing is illegal in the UK.
What is the difference between vertical and horizontal price fixing?
Price-fixing, any agreement between business competitors (“horizontal”) or between manufacturers, wholesalers, and retailers (“vertical”) to raise, fix, or otherwise maintain prices. Many, though not all, price-fixing agreements are illegal under antitrust or competition law.
Why do cartels often not last very long?
Cartels may also sustain inefficient firms in an industry and prevent the adoption of cost-saving technological advances that would result in lower prices. Though a cartel tends to establish price stability as long as it lasts, it does not typically last long. The reasons are twofold.
Why are cartels doomed to fail?
Many collusive agreements between firms in an oligopoly eventually collapse either because of exposure by the competition authorities, the impact of a recession or perhaps because of a breakdown in co-operation between firms and cheating on output agreements.
What makes a cartel unsuccessful?
The common explanation for the instability of cartels is that a successful cartel agreement creates strong incentives for individual members to cheat. Cheating invites retaliation and the result is that the cartel often fails.
How do cartels affect the economy?
Cartels harm consumers and have pernicious effects on economic efficiency. A successful cartel raises price above the competitive level and reduces output. All of these effects adversely affect efficiency in a market economy.
What type of firm is the cartel?
A cartel is a form of combination in which independent business firms in an industry agree to regulate their output, to fix sales quotas and to control sales contracts and prices. A cartel is a voluntary association formed with the objective of eliminating competition and to secure monopoly in the market.