Question

In: Economics

a prominent contempary of keynes, argued and empirically demonstrated the major corporations "adminster prices" and mansge...

a prominent contempary of keynes, argued and empirically demonstrated the major corporations "adminster prices" and mansge a reduction in demand by controlling the level of supply. how does this concept and finding support, the theories of keynes and his neoclassical contemporaries

Solutions

Expert Solution

The administered prices related explanation firstly given by the Gardiner and Adolf A.Berle economist.Based on their point of view.Basically the administered price holds a large portion of industrial prices that is not expect to some circumstances mainly not behave in the case of fashion. Administrative price is the part of industrial cost.The fluctuation al or cyclical behaviour of industries various costs also linked in administrative price.
it can decrease or increase based on some actions.Keynes’s theory was the first to sharply separate the study of economic behavior and markets based on individual incentives from the study of broad national economic aggregate variables and constructs. According to keynesian economics or theory said that price controls tend to lead to shortages and also the supply curve has upward slope when the higher prices and greater supply. And when the demand curve has a downward slope it lead to higher prices corresponds to lower demand. On the time of recessions administered prices showed a tendency not fall as much as market prices and that lead to fall in demand and also through a fall in sales ,production and employment.The administrative prices can reduce by use of some techniques like
Consolidate your purchases and negotiate better pricing.The vendors need get to compete for your business.
Review your vendors regularlyWherever possible, make expenses variable versus fixed.
Cultivate fiscal discipline as a core company value.


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