PRICE THEORY
Price Theory: Meaning and Its Limitations Meaning of Price Theory: Every individual is interested in prices; and rightly so. Everyone whether he is a consumer or a producer is affected by rise or fall in prices. A consumer is anxious to find out whether the goods he wants to buy have become cheaper or dearer. Similarly, producer is interested in whether the prices of the products he produces and the inputs he uses, have gone up or down. “An economist is someone who knows the price of everything and the value of nothing.” This observation may not be true at all. But economists right from Adam Smith, Marx, and Marshall ,Robins and Hicks have been engaged in explaining how prices are determined and why and when the Price theory, also known as microeconomics, is concerned with the economic behaviour or individual consumers, producers, and resource owners. It explains the production, allocation, consumption and pricing of goods and services. Price theory, as defined