The most obvious example is in pricing a loan, when the cost will be expressed as the percentage rate of interest. The total amount of interest payable depends upon credit risk, the loan amount and the period of the loan. Other examples can be found in pricing financial derivatives and other financial assets. This requested amount is often called the asking price or selling price, while the actual payment may be called the transaction price or traded price. Economic price theory asserts that in a free market economy the market price reflects interaction between supply and demand: the price is set so as to equate the quantity being supplied and that being demanded. When a commodity is for sale at multiple locations, the law of one price is generally believed to hold. This essentially states that the cost difference between the locations cannot be greater than that representing shipping, taxes, other distribution costs and more.
The paradox of value was observed and debated by classical economists. One solution offered to the paradox of value is through the theory of marginal utility proposed by Carl Menger, one of the founders of the Austrian School of economics. As William Barber put it, human volition, the human subject, was “brought to the centre of the stage” by marginalist economics, as a bargaining tool. Neoclassical economists sought to clarify choices open to producers and consumers in market situations, and thus “fears that cleavages in the economic structure might be unbridgeable could be suppressed”. Without denying the applicability of the Austrian theory of value as subjective only, within certain contexts of price behavior, the Polish economist Oskar Lange felt it was necessary to attempt a serious integration of the insights of classical political economy with neo-classical economics.
This would then result in a much more realistic theory of price and of real behavior in response to prices. Marxists assert that value derives from the volume of socially necessary labour time exerted in the creation of an object. Price is what a buyer pays to acquire products from a seller. Finally, while pricing is a topic central to a company’s profitability, pricing decisions are not limited to for-profit companies. The behavior of non-profit organizations, such as charities, educational institutions and industry trade groups, also involve setting prices. The price of an item is also called the “price point”, especially where it refers to stores that set a limited number of price points.
Basic price is the price a seller gets after removing any taxes paid by a buyer and adding any subsidy the seller gets for selling. Producer price is the amount the producer gets from a buyer for a unit of a good or service produced as output minus any tax, it excludes any transport charges invoiced separately by the producer. Price optimization is the use of mathematical analysis by a company to determine how customers will respond to different prices for its products and services through different channels. Costas Lapavitsas, Political Economy of Money and Finance. Pierre Vilar, A history of gold and money. William Barber, A History of Economic Thought. Studies in the Surplus Approach, 2, pp.