A Study On Business Managerial Economics
Title: Examine the factors that determine the price of computers in a free market. In recent years, the price of personal computers has continued to fall even in the face of increasing demand. Analyse with the aid of diagrams how this has happened.
A free market is a market whereby all economic decisions are made by the household and firms, which are assumed to work to their own self interest and where land and capital are privately owned. The determination of price has to do with the interaction of the demand and supply curves (price mechanism) and the behaviour of consumers in the market. In a free market it is assumed that private individuals are out to maximised profits, consumers seek to get the best value (utility) for money from their purchases and workers seek to maximise their wages relative to the human cost of working in a particular job. In this economy as well, individuals are free to make their own economic choices, workers are free to choose where to work and how much work to do and firms are free to choose to what to sell and what production methods to use.
So in order to determine prices in a free market the price mechanism comes into action which will be discussed subsequently. Also, there will be need to discuss the various factors determining prices in relation to change in quantity demanded and change in demand of personal computers. When any other factor that influences buying plans other than price is called change in demand but when it is only price that influences buying plans is called change in quantity demanded. These will all be buttress with tables and curves in this discussion accompanied by the factors itself and some reality factors determining the price of computers in a free market. (责任编辑：BUG)