Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsSupply3 Marks
Question
'Price is jointly determined by its demand and supply.' - Explain.
✓
Answer
Price determination in the market is defined by the purchase and sale at a particular price.
Market price means price at which a commodity or a service is sold in the market at a particular point of time and place.
In fact, price of a product is always determined by the demand of the supply of a product and their interaction.
Price is never determined only by the demand of the consumer or only by the supply of the procedure alone.
It is always jointly determined by the demand and supply.
According to Alfered Marshall, "Price of a product is jointly determined by demand and supply as the two parts of a scissors jointly work for the cutting.
Demands and supply are essential for the determination of price of the product.
" Many believe the price of the product is always determined by the producer.
But the firm cannot decide the price of the product which it desires.
If the consumer is not ready to buy the product at price determined by the producer, then there is no demand in the market and therefore, product will not be sold in the market.
In the same way, if the consumers are ready to buy a product at a particular price, but the producer is not ready to sell the product at that price, then the product cannot be purchased by the consumers, because sale does not happen.
Thus, demand or supply of a product cannot determine the price of the product independently.
Demand and supply both are essential to determine the price and jointly they can decide the price.
Only therefore, Alferd Aarshall has given the example of two parts of the scissors jointly work to cu the paper or cloth.
Both are equally important. In this way, demand and supply both are equally important determine the price.
Therefore, when the producer decides side should equally be active.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.