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The consumer demand theory describes how quantity demanded and quantity supplied affect the price of a service or commodity price. It states that supply and demand ultimately lead to the market price of goods and services.
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Production is the process of creating value from a good or Service. The study of production helps in the decision-making process of resource management, labor supply, and the supply and demand of raw materials. Factors help determine the production cost and, ultimately, the price of goods and services.
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Perfect competition is where individual markets and companies sell identical products whose market share does not influence the pricing. The barrier to entry and exit is low, and customers have ample knowledge of the products.
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This is a situation where many firms offer similar products that are not perfect substitutes for each other, and hence one firm’s decision in the market doesn’t affect the operations of the others. The balance scales are shifted to one side, and the firm controlling the majority of the market dictates the terms.
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