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Analysis of Pricing

There are two reasons that cause the need to analyze demand and supply over the factors of production. The first is to explain the principle to use and allocate the factors of production efficiently. The second analysis of various factors to explain how income is determined.

Analysis of PricingIn order to achieve maximum benefit then an entrepreneur will use a factor of production to the level where the maximum profit is achieved. The question is how such a situation be achieved?. A factor of production will create the maximum profit when the additional production costs incurred for the production of factors that together with the additional proceeds obtained from the additional production that was created by the input.

In the market for goods that are imperfect competition will lower prices at the level of production / sales of goods higher. These lower prices led to total sales revenue and sales results at every level of the use of marginal labor is lower than that contained in a perfectly competitive market.

The factors of production is influenced by the desire of entrepreneurs to produce goods that will be sold to the market to meet consumer needs. It has been shown that the activities of entrepreneurs produce goods intended to benefit the many factors of production which will be used to advantage depend employers may obtain. During the accretion use something of input will add to profits, more factors will be used. Therefore, employers demand upon something determined by the ability of the production factors of production factors to produce goods that can sell it with a profitable business, demand for production factors called divided demand. Next.

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