Administered prices are prices of goods set by the internal pricing structures of firms that take into account cost rather than through the market forces of supply and demandand predicted by classical economics. They were first described by institutional economists Gardiner Means and Adolf A. Berle in their 1932 book The Modern Corporation and Private Property . As Means argued in 1972, "Basically, the administered-price thesis holds that a large body of industrial prices do not behave in the fashion that classical theory would lead one to expect. It was first developed in 1934–35 to apply to the cyclical behavior of industrial prices. It specifically held that in business recessions administered prices showed a tendency not to fall as much as market prices while the recession fall in demand worked itself out primarily through a fall in sales, production, and employment."
Since Means and Berle's pioneering work in the 1930s, numerous empirical surveys have been carried out to understand the role of administered prices in national economies. Surveys conducted in the 1980s found that 70–85% of American industrial prices were markup or cost-added prices.An American survey from the 1990s covering an industrial and non-industrial pricing behavior found that a majority of prices take cost into account. A Canadian survey from 2002 found that 67.1% of major Canadian firms attributed price-stickiness to markup pricing. A 2003–2004 survey done in France found that 36.9% of prices are cost-added (another 4% of prices were "regulated"). Writing in 2006, Fabiani et al found that administered prices account for 42% of prices (of both goods and services) in Italy, 46% in Belgium, 52% in Spain, 65% in Portugal, and an average of 54% of all Eurozone prices. They also account for 40% of the prices of goods sold in France and 73% of those sold in Germany. A survey of 725 Norwegian firms from the 2000s found that 69% of those firms use markup pricing. A survey of 5,300 New Zealand firms found that 54% of business prices were cost-added, while another survey of 700 Australian companies found that at least 49% of their prices were marked-up. A study of 630 Japanese firms from 2000 found 54% of them use mark-up pricing. A survey of 580 Icelandic firms found that markup prices were the most common, accounting for 45% of all prices set by those companies.
Economics is the social science that studies how people interact with value; in particular, the production, distribution, and consumption of goods and services.
The euro is the official currency of 19 of the 27 member states of the European Union. This group of states is known as the eurozone or euro area and includes about 343 million citizens as of 2019. The euro, which is divided into 100 cents, is the second-largest and second-most traded currency in the foreign exchange market after the United States dollar.
In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In theoretical models where conditions of perfect competition hold, it has been demonstrated that a market will reach an equilibrium in which the quantity supplied for every product or service, including labor, equals the quantity demanded at the current price. This equilibrium would be a Pareto optimum.
New Keynesian economics is a school of macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroeconomics.
This aims to be a complete article list of economics topics:
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of the euro.
A price is the quantity of payment or compensation given by one party to another in return for one unit of goods or services. In some situation, the price of production has a different name. If the product is a "good" in the commercial exchange, the price of this product will likely to be called "price". However, if the product is "service", there will be other possible names for this product's name. For example, the graph on the bottom will show some situations A price is influenced by production costs, supply of the desired item, and demand for the product. A price may be determined by a monopolist or may be imposed on the firm by market conditions.
The following outline is provided as an overview of and topical guide to industrial organization:
Cost-plus pricing is a pricing strategy in which the selling price, of goods and services, is determined by adding a specific fixed markup percentage to a singular product's unit cost. Essentially, the markup percentage is the company's way to generate a profit margin that reaches their target rate of return and maximises their overall profits. The markup percentage can be derived by using the firm's target rate of return. An alternative pricing method is value-based pricing.
Nominal rigidity, also known as price-stickiness or wage-stickiness, is a situation in which a nominal price is resistant to change. Complete nominal rigidity occurs when a price is fixed in nominal terms for a relevant period of time. For example, the price of a particular good might be fixed at $10 per unit for a year. Partial nominal rigidity occurs when a price may vary in nominal terms, but not as much as it would if perfectly flexible. For example, in a regulated market there might be limits to how much a price can change in a given year.
The foreign exchange market is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the credit market.
In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service to increase economic profit. In other words, market power occurs if a firm does not face a perfectly elastic demand curve and can set its price (P) above marginal cost (MC) without losing sales. This indicates that the magnitude of market power is associated with the gap between P and MC at a firm's profit maximising level of output. Such propensities contradict perfectly competitive markets, where market participants have no market power, P = MC and firms earn zero economic profit. Market participants in perfectly competitive markets are consequently referred to as 'price takers', whereas market participants that exhibit market power are referred to as 'price makers' or 'price setters'.
The economy of Europe comprises about 748 million people in 50 countries. The formation of the European Union (EU) and in 1999, the introduction of a unified currency, the Euro, brings participating European countries closer through the convenience of a shared currency and has led to a stronger European cash flow. It is important to know The European Union is not a country, it’s a global unique organisation, the entity with the biggest economy in the world. The European Union also “regulates” the global market by the Single Market. The difference in wealth across Europe can be seen roughly in former Cold War divide, with some countries breaching the divide. Whilst most European states have a GDP per capita higher than the world's average and are very highly developed, some European economies, despite their position over the world's average in the Human Development Index, are poorer. Europe in banking had total asset more than $50 trillion and its global management had asset more than $20 trillion.
The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market.
Gardiner Coit Means was an American economist who worked at Harvard University, where he met lawyer-diplomat Adolf A. Berle. Together they wrote the seminal work of corporate governance, The Modern Corporation and Private Property. During the New Deal, Means served as an economic adviser to Franklin D. Roosevelt and Henry A. Wallace.
An economic profit is the difference between the revenue a commercial entity has received from its outputs and the opportunity costs of its inputs. Unlike an accounting profit, an economic profit takes into account both a firm's implicit and explicit costs, whereas an accounting profit only relates to the explicit costs which appear on a firm's financial statements. Because it includes additional implicit costs, the economic profit usually differs from the accounting profit.
The following outline is provided as an overview of and topical guide to economics:
A markup rule is the pricing practice of a producer with market power, where a firm charges a fixed mark-up over its marginal cost.
Huw David Dixon, born 1958, is a British economist. He has been a professor at Cardiff Business School since 2006, having previously been Head of Economics at the University of York (2003–2006) after being a Professor of economics there (1992–2003), and the University of Swansea (1991–1992), a Reader at Essex University (1987–1991) and a lecturer at Birkbeck College 1983–1987.
A monopoly price is set by a monopoly. A monopoly occurs when a firm lacks any viable competition, and is the sole producer of the industry's product. Because a monopoly faces no competition, it has absolute market power, and thereby has the ability to set a monopoly price that will be above the firm's marginal (economic) cost. Since marginal cost is the increment in total required to produce an additional unit of the product, the firm would be able to make a positive economic profit if it produced a greater quantity of the product and sold it at a lower price.