Administered. inflation can therefore be regarded as a temporarily higher rate of price . increase for concentrated industries , as oligopolists catch up with prior. shifts in demand. During this period, prices may appear unresponsive.
What are examples of administered prices?
Products and services that are subject to administered prices include municipal rates, water, electricity, public transport costs — including train, motor licences and motor registration costs — and school and tertiary education fees.
What is meant by administered price?
An administered price is the price of a good or service as dictated by a government or centralized authority , as opposed to buyers and sellers interacting according to supply and demand.
Who determines administered price?
Administered price, price determined by an individual producer or seller and not purely by market forces. Administered prices are common in industries with few competitors and those in which costs tend to be rigid and more or less uniform.
What is non administered price?
Non administered prices on the other hand is administered by unauthorized company or money lenders . Government has no control over it. A method of determining the price for a good or service based on the perceived expectations of customers.
Why are prices administered?
An administered price is dictated by an entity that can supersede the effects of supply and demand . For example, a government regulatory commission can set the price at which electricity will be charged to customers.
What is full cost pricing method?
Full cost pricing is a practice where the price of a product is calculated by a firm on the basis of its direct costs per unit of output plus a markup to cover overhead costs and profits .
Why is rent seeking a problem?
Rent seeking can disrupt market efficiencies and create pricing disadvantages for market participants . It has been known to cause limited competition and high barriers to entry. Those that benefit from successful rent seeking obtain added economic rents without any added obligations.
Which of the following is an example of derived demand?
For another example, demand for steel leads to derived demand for steel workers, as steel workers are necessary for the production of steel. As the demand for steel increases, so does its price.
What is competitive pricing?
Competitive pricing is the process of selecting strategic price points to best take advantage of a product or service based market relative to competition .
What is product skimming?
Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time . ... The skimming strategy gets its name from “skimming” successive layers of cream, or customer segments, as prices are lowered over time.
Is administered price mechanism actually dismantled in the oil and gas sector?
After the new Industrial Policy of 1991, the government first opened refinery sector for private participation. ... The decision to move from a the industry to a market driven petroleum sector was the most important decision which resulted in the dismantling of the Administered Price mechanism in April 2002 .
What do you mean by marginal cost pricing?
Marginal-cost pricing, in economics, the practice of setting the price of a product to equal the extra cost of producing an extra unit of output . By this policy, a producer charges, for each product unit sold, only the addition to total cost resulting from materials and direct labour.
How price of a commodity is determined?
Just like equity securities, commodity prices are primarily determined by the forces of supply and demand in the market . 2 For example, if the supply of oil increases, the price of one barrel decreases. Conversely, if demand for oil increases (which often happens during the summer), the price rises.
What are sources that can start a demand pull inflation?
- A growing economy: When consumers feel confident, they spend more and take on more debt. ...
- Increasing export demand: A sudden rise in exports forces an undervaluation of the currencies involved.
- Government spending: When the government spends more freely, prices go up.
What is the meaning of derived demand?
Derived demand is an economic term that refers to the demand for a good or service that results from the demand for a different, or related, good or service . Derived demand is related solely to the demand placed on a product or service for its ability to acquire or produce another good or service.
