There is hardly another reason for change the price. Either the firm does it for itself as its costs are high and revenues are not significant or it does to beat the competition and gain bigger market share. Some theorists might add a third driving force behind pricing decision i. Hyatt In the case of Hayes, the decision to change the price of aluminum wheel is driven by competition and not the cost.
Command Economy A free market economy promotes the production and sale of goods and services, with little to no control or involvement from any central government agency. Instead of government-enforced price controls, as seen in many socialist and communist countries, a free market economy allows the relationships between product supply and consumer demand to dictate prices.
The lack of government control allows free market economies a wide range of freedoms, but these also come with some distinct drawbacks.
Freedom to Innovate Free market economies allow business owners to innovate new ideas, develop new products and offer new services. Entrepreneurs need not depend on government agencies to tell them when the public needs a new product.
They can study consumer demands, research popular trends and meet the customer's needs through innovation. Innovation also breeds competition among firms, as each firm attempts to improve on the previous product generations by adding more and better features to existing products.
Customers Drive Choices In a free market economy, the customers make the ultimate decision on which products succeed or fail. When presented with two products that offer similar benefits, customers vote with their purchases and decide which product will survive.
Customers also determine the ultimate price point for a product, which requires producers to set product prices high enough to make a profit, but not so high that customers will hesitate to make a purchase.
Dangers of Profit Motive The primary objective for any company in a free market economy is to make a profit. In many cases, companies may sacrifice worker safety, environmental standards and ethical behavior to achieve those profits.
The early s saw such unethical behavior run rampant at companies such as Enron and WorldCom.
The Deepwater Horizon oil spill inone of the largest environmental disasters in U. Market Failures When a free market economy spins out of control, the consequences can be severe. From the Great Depression of the s to the real estate market crash ofmarket failures have devastated the lives of millions in lost income, unemployment and homelessness.
Many of these failures have stemmed from those seeking short-term profits over slow and steady gains, usually aided by loose credit, highly-leveraged assets and minimal government intervention.Free College Essay Products, Services, and Prices in the Free Market Economy: Price Elasticity of Demand.
Domino’s Pizza, Inc In Tom Monaghan and his brother James bought DomiNicks, a pizza store in Ypsilanti, Michigan. Products, Services, and Prices in the Free Market Economy Starbucks Corporation (Starbucks) is considering whether to increase or decrease the price of their product in order to increase revenue.
Deciding upon which direction to go with the price depends upon the price elasticity of the product. Jun 26, · Free market economies allow business owners to innovate new ideas, develop new products and offer new services.
Products, Services And Prices In The Free Market words - 5 pages IntroductionThe company chosen for this paper is McDonald's Corporation (McDonald's) and the product under consideration is the Big Mac™ sandwich.
Products, Services, and Prices in the Free Market Economy: Price Elasticity of Demand Words | 5 Pages. this point, the company realizes that $7 is where they are making most of their profit and that is the reason Domino 's Pizza would leave their product on the market at this price for a longer time.
And Government Intervention With Free Market Equilibrium Price And The More Suitable Model For The Sudan Best Form Of Government Extension Program: Agriculture in Industrializing Place PRODUCTS, SERVICES, AND PRICES IN THE FREE MARKET ECONOMY Products, Services, And Prices In The Free Market Economy products,services, and prices in the free.