Administered Prices - Mark up pricing
"An administered price or mark-up price is as follows:
(1) a price set by businesses through their cost accounting conventions in an ex ante
manner before transactions take place, on the basis of total average
unit costs plus a profit mark-up, at a given, estimated, projected or
target quantity of output or level of sales (from which of course the
actual quantity of output produced or sold in a given time period might
differ);
(2) a price that is generally inflexible with respect to demand,
but tends to change – though by no means necessarily or universally –
when total average unit costs change or when the business wants to
change its profit mark-up;
(3) a price that is not governed by supply and demand dynamics in
the usual economics sense, and which is not adjusted towards market
clearing levels to create supply and demand equilibrium, and
(4) a price that is usually constrained by competition with other
mark-up pricing businesses and often a price leader, and that will not
be set at a level so high that it is unreasonable."[2]
"Mark-up prices are set by businesses through their cost accounting conventions in an ex ante
manner before transactions take place, on the basis of
(1) total
average unit costs plus
(2) a profit mark-up, at a given, estimated
(3) projected or target quantity of output or level of sales (from which of
course the ex post or actual quantity of output produced or sold in a given time period might differ).
Empirical evidence shows us that mark-up prices are generally inflexible
with respect to demand, but tend to change – though it is by no means a
necessary or universal process – when total average unit costs change
or when the business wants to change its profit mark-up." [1]
Post Keynesian Price Theory 101 (Teoría - evidencia empírica - Galbraith - en contra de los austríacos)
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