Business, Legal & Accounting Glossary
A price is the amount of money that must be paid in exchange for a product or service. Price is most often thought of in terms of what a consumer has to pay for something.
The term Price, in economics as well as business, refers to the numerical monetary value assigned for a particular good, asset or service. A central concept of microeconomics, price is one of the prominent variables in the price theory or the resource allocation theory. In marketing, price is also equally significant as one of the four variables in the marketing mix that is used to develop a marketing plan by the business people.
Usually applied to refer to a component in a transaction or an exchange between two parties, price is what is given up by one of the parties to obtain a particular good, asset or service offered by another party. The former is the buyer and the latter is the seller. Price, in other words, is the payment a buyer does to acquire something from the seller. However, this definition of price is somewhat limited in its scope.
Nominal price, which means the monetary value for a good or service. Nominal price is one that is not adjusted against inflation. This means that they are not adjusted to affect the impact of inflation on prices. It may also be described as the price of a particular product in terms of levels of the price that are operational at present.
Relative price, which refers to the exchange ratio between real goods. Relative price may be defined as the financial worth of a particular product or service in terms of another product or service.
As per Marxian economics price theory has its base in the part of human history that deals in economic transactions between human civilizations. Money prices have also been regarded in Marxian economics as a monetary representation of exchange values.
Following are some important concepts in the context of price:
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This glossary post was last updated: 27th March, 2020 | 0 Views.