International prices, Theory of the question and classification...

International prices

Theory of the question and classification of prices

The concept, content and essence of the price. According to the economic theory the price is a converted form of value. Price (value) is an internal measure of the volume (scale, significance) of the product. If the value is expressed in money, it determines the price. From the time of Aristotle, it is common to divide the concepts of consumer and exchange values. Consumer value reflects the ability of a product to meet a person's needs. The exchange value is the value of the commodity in terms of its ability to exchange for other goods. The exchange ratio of the two goods is the relative prices of these goods, expressed in a constant monetary commodity. The exchange value of a commodity is determined by the costs of production (wages, profit and rent). So explained the price of the goods A. Smith, who proceeded from the fact that the costs of production determine the natural price of the goods, relative to which, depending on the changes in demand, the actual prices fluctuate. The founder of the labor theory of value (value) D. Ricardo argued that "the value of a commodity ... depends on the relative amount of labor necessary for its production."

In the second half of the XIX century. economists of the neo-classical school focused attention not on the intrinsic value, but on the factors determining the market price. Unlike their predecessors, when developing a theory of exchange value, they turned to the utility of the commodity. The price is determined by marginal utility, which is the cause and source of exchange value. On this basis, A. Marshall put forward the idea that the market price is determined by the interaction of supply and demand, revising the Ricardo-Marx theory, in which costs were considered the price base. Modern economic theory continued to develop in this direction, even more than Marshall moving away from the Marxist approach, according to which the theory of value and the theory of pricing were divided in the process of analyzing the labor theory of value.

In the scientific and special economic literature and international trade practice, there are many definitions of price. Here are some of them:

• The fair price (just price ) is the price that is estimated to be correct from a moral point of view. It is based on the principles of natural justice and, unlike the market price, does not fulfill the function of allocation of resources;

• natural price (natural price ) - the term used by A. Smith to describe the value (value) of the commodity, relative to which its market price fluctuates. The natural price, in fact, is the price of long-term equilibrium and depends on the cost of production;

• alternative price (opportunity cost ) - the working time required to produce a unit of one product, expressed through the working time necessary to produce a unit of another product;

>

• transfer prices (transfer prices ) - prices that differ from the market prices of intra-corporate trade between divisions of the same corporation located in different countries; they are used to transfer profits and reduce taxes;

• shadow price (shadow price ) is the conditional price of a product or service that does not have a market price. Where market prices do not reflect alternative costs, in analyzing the results of costs resorted to shadow prices. The term is also used in the analysis of the shadow economy, where there are so-called "adequate" (which have nothing to do with the scientific approach), shadow prices.

Historically, the first exit of any company or individual trader with a specific commodity for its sale beyond the national border meant a search for a higher rate of profit, while the price factor played a key role. The price of the goods (sold or purchased) is one of the most significant aspects of the contract of sale. Accordingly, each foreign trade transaction necessarily contains a price condition as a key element of the entire transaction.

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)