Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics focuses on the study of individual markets, sectors, or industries as opposed to the economy as a whole, which is studied in macroeconomics.
Cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer. Usually, the price also includes a mark-up for profit over the cost of production.
A price is the quantity of payment or compensation expected, required, or given by one party to another in return for goods or services. In some situations, especially when the product is a service rather than a physical good, the price for the service may be called something else such as "rent" or "tuition". Prices are influenced by production costs, supply of the desired product, and demand for the product. A price may be determined by a monopolist or may be imposed on the firm by market conditions.
Pricing is the process whereby a business sets the price at which it will sell its products and services and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of the product.
In the social sciences, bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service debate the price or nature of a transaction. If the bargaining produces agreement on terms, the transaction takes place. It is often commonplace in poorer countries, or poorer localities within any specific country. Haggling can mostly be seen within street markets worldwide, wherein there remains no guarantee of the origin and authenticity of available products. Many people attribute it as a skill, but there remains no guarantee that the price put forth by the buyer would be acknowledged by the seller, resulting in losses of profit and even turnover in some cases. A growth in the country's GDP Per Capita Income is bound to reduce both the ill-effects of bargaining and the unscrupulous practices undertaken by vendors at street markets.
Cost-plus pricing is a pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage to the product's unit cost. Essentially, the markup percentage is a method of generating a particular desired rate of return. An alternative pricing method is value-based pricing.
In microeconomics, diseconomies of scale are the cost disadvantages that economic actors accrue due to an increase in organizational size or in output, resulting in production of goods and services at increased per-unit costs. The concept of diseconomies of scale is the opposite of economies of scale. It occurs when economies of scale become dysfunctional for a firm. In business, diseconomies of scale are the features that lead to an increase in average costs as a business grows beyond a certain size.
A contractor or builder, is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of a building project.
Construction management (CM) aims to control the quality of a project's scope, time, and cost to maximize the project owner's satisfaction. It uses project management techniques and software to oversee the planning, design, construction and closeout of a construction project safely, on time, on budget and within specifications.
The Federal Acquisition Regulation (FAR) is the principal set of rules regarding Government procurement in the United States, and is codified at Chapter 1 of Title 48 of the Code of Federal Regulations, 48 CFR 1. It covers many of the contracts issued by the US military and NASA, as well as US civilian federal agencies.
A business can use a variety of pricing strategies when selling a product or service. To determine the most effective pricing strategy for a company, senior executives need to first identify the company's pricing position, pricing segment, pricing capability and their competitive pricing reaction strategy. Pricing strategies and tactics vary from company to company, and also differ across countries, cultures, industries and over time, with the maturing of industries and markets and changes in wider economic conditions.
A cost-plus contract, also termed a cost plus contract, is a contract such that a contractor is paid for all of its allowed expenses, plus additional payment to allow for risk and incentive sharing. Cost-reimbursement contracts contrast with fixed-price contract, in which the contractor is paid a negotiated amount regardless of incurred expenses.
A bilateral monopoly is a market structure consisting of both a monopoly and a monopsony.
Bargaining power is the relative ability of parties in an argumentative situation to exert influence over each other in order to achieve favourable terms in an agreement. This power is derived from various factors such as each party’s alternatives to the current deal, the value of what is being negotiated, and the urgency of reaching an agreement. A party's bargaining power can significantly shift the outcome of negotiations, leading to more advantageous positions for those who possess greater leverage.
Construction bidding is the process of submitting a proposal (tender) to undertake, or manage the undertaking of a construction project. The process starts with a cost estimate from blueprints and material take offs.
A cost-plus-incentive fee (CPIF) contract is a cost-reimbursement contract which provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs.
A fixed-price contract is a type of contract for the supply of goods or services, such that the agreed payment amount will not subsequently be adjusted to reflect the resources used, costs incurred or time expended by the contractor. This contract type may be contrasted with a cost-plus contract, which is intended to cover the costs incurred by the contractor plus an additional amount for profit, and with time-and-materials contracts and labor-hour contracts. Fixed-price contracts are one of the main options available when contracting for supplies to governments.
A construction contract is a mutual or legally binding agreement between two parties based on policies and conditions recorded in document form. The two parties involved are one or more property owners and one or more contractors. The owner, often referred to as the 'employer' or the 'client', has full authority to decide what type of contract should be used for a specific development to be constructed and to set out the legally-binding terms and conditions in a contractual agreement. A construction contract is an important document as it outlines the scope of work, risks, duration, duties, deliverables and legal rights of both the contractor and the owner.
This glossary of economics is a list of definitions of terms and concepts used in economics, its sub-disciplines, and related fields.
A lump sum contract in construction is one type of construction contract, sometimes referred to as stipulated-sum, where a single price is quoted for an entire project based on plans and specifications and covers the entire project and the owner knows exactly how much the work will cost in advance. This type of contract requires a full and complete set of plans and specifications and includes all the indirect costs plus the profit and the contractor will receive progress payments each month minus retention. The flexibility of this contract is very minimal and changes in design or deviation from the original plans would require a change order paid by the owner. In this contract the payment is made according to the percentage of work completed. The lump sum contract is different from guaranteed maximum price in a sense that the contractor is responsible for additional costs beyond the agreed price, however, if the final price is less than the agreed price then the contractor will gain and benefit from the savings.
