Background of Price Fixing

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Background of Price Fixing

In producing activity, an employer must first consider the situation in the market, both in markets where sales / demand for products or markets referred to in the market output and factors of production or referred to input markets. The next step that should be considered joint employers is how the mode of production factors which should be used for such use to reach an optimum efficiency in production process. Production factors are important in production process. When a company gets the factors of production (input) of good quality then the result of production (output) that are created will also have a high value in the eyes of consumers.

To get the factors of production, then the company must conduct the bid process as a prospective buyer with a seller that is provider of production factors. The detailed process of price formation mechanism in the market or in general can be observed that initially sellers offer goods or services with high prices, while buyers bid a lower price so unbearable when each would not have occurred sale and purchase transactions. Therefore, buyers are encouraged to raise its offer price in order to obtain the desired goods or services. While sellers are willing to lower prices for goods and services offered can be sold. Bargaining between buyers and sellers continue until this is obtained at prices agreed by both parties is when the price of goods or services demanded equal to the price of goods or services offered.

After the company doing the bargaining process and agree on the price of factors of production are desired, then the production process will be immediately performed. Of course, every company always apply the principle of doing a minimal sacrifice to get the results as much as possible or in other words, companies are trying to get the price of production factors is low but good quality. Price is an important factor in this process. So the pricing process in the input market must be understood and observed by every manufacturer.

Healthy | Smart | Rich, at: 5/14/2011