I want to know how a changing input price effects the price of the output. Like if the Input is 10% more expensive, will the output also be 10% more expensive or will it be different?
I am looking for literature to answer this quetion.
As far as my perception goes, if there is an increase in the price of an input, the pricing of the product is based on the following factors:
1. Nature of competition prevailing in the market
2. Objectives of the firm
3.Price elasticity of the product
4. Price sensitivity of target customer groups.
5. The stage of the product in product life cycle.
Based on the above factors there might be a constant increase in input and output or else it might vary.
If you build market price by formula: Cost price +Profit=Market price, you wiil have situation about you are speaking.Consider about this formula: Market price=Cost price +Profit.
Krishna Kumar D Dragoljub Šarović thanks to both of you. I will do further research according to your key points
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