Red price - what does this expression mean?

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:47

The price of goods is a universal regulator of producer-buyer relations. This is the very indicator due to which the product will be bought (or not bought) and, accordingly, the seller will be able or not able to carry out his activities.

The right choice of price is the key to the success of the financial policy of the producer. In the world trade practice, enough information has been accumulated on the basic principles of pricing and the factors that affect them.

What determines the price?

Let's consider the main factors influencing the formation of market prices. There are several of them:

1. Number of market entities (sellers and buyers). The larger the number, the smaller the price fluctuation.
2. The independence of these entities. As a rule, the fewer sellers or buyers on the market, the more opportunities they have to influence price formation.
3. Various product range. The larger it is, the more stable the positions for certain types of products.
4. External restrictions (temporary fluctuations in the ratio of supply and demand, government regulation, etc.).

Howprice formed?

The real price is the number of units of a certain currency that the buyer is obliged to give to the seller. The basic rule here is that the more inaccessible (more exclusive) the product, the more expensive it is, and the less willing to buy it. The shortage of certain goods for consumers generates a higher price for each unit, which automatically reduces demand and equalizes it with supply.

The fluctuation of prices for any group of goods affects their release. When the price increases, the release and sale of this product becomes attractive to a large number of manufacturers. As a result of market saturation, prices decrease. Some commodity producers are sometimes forced to leave the game.

Thus, prices force producers to regulate the quantity of goods produced. This happens due to such a phenomenon as demand.

Demand as a concept

Every person needs a variety of material goods. He does not create the vast majority of them on his own, but comes to the market for them. But to acquire the desired buyer must have a certain amount of money. Needs, supported by the ability to pay for what is needed, and there is a demand.

Thus, demand characterizes the relationship between the mass of goods that people are willing to pay and their price. That is, demand directly depends on the price. When the price of a product changes, the seller must calculate how this will affect demand and, accordingly, sales.

The pricing mechanism is based onclash of interests between sellers and buyers. This largely spontaneous process operates continuously and is characteristic of any market economy.

Another component of this mechanism is supply, that is, the volume of output that producers are ready to offer to the consumer at a given price at a given time. Everyone has probably heard that the result of the "meeting" of supply and demand is the real price of a product or service.

Red price - what is it?

The market price or the equilibrium price is the one at which the goods will be exchanged for money - no more, no less. Is the product always offered for sale at a price close to the real one? How to assess the "fairness" of the requested amount? It's no secret that the rise and fall of demand (and with it prices) for the same goods is influenced by many different factors - from seasonal fluctuations in demand to leaked information about poor quality of the product.

It was when trying to subjectively assess the "legitimacy" of the seller's setting a certain fee for a product or service that the term "red price" was probably born.

What does it mean? Most people have heard it more than once in their lives, and "in everyday life" everyone roughly knows what it is about. But let's see how dictionaries interpret this concept.

Give me an encyclopedia

The economic dictionary interprets it as the highest, i.e. the highest price that can be paid for any product. With hima dictionary of synonyms and a phraseological dictionary are in solidarity.

At the same time, according to the definition given by the legal dictionary, the term "red price" has two meanings at once. The first of them is the price that will suit both participants in the transaction - both the seller and the buyer. The second value is the amount that the buyer calls in response to the overstated (in his opinion) requirements of the seller.

It is in this last meaning that the concept of "red price" has taken root both in everyday life and in Russian literature. "Yes, to him the red price is a penny!" - they usually talk about a cheap or low-quality product that they are trying to sell at exorbitant prices.

This concept is found precisely in this meaning in the works of Russian classics, for example, in "Dead Souls" by N. V. Gogol or in "Peter the Great" by A. N. Tolstoy.

Thus the expression came into use. And now it is used most often in this sense.