Introduction

Theory of Price Determination

How prices are fixed depends on the type of market where people buy and sell things.

The nature of the market where goods and services are traded determines the price of goods and services.

This means the way a market is set up will tell us how the price of bread or garri will be decided.

In some places, the government makes the rules for prices, but in other places, the buyers and sellers decide by their actions.

Price is determined by the "Price Legislation" in a regulated market while in a free market economy, it is determined by the "interactive forces of demand and supply".

So, if the government controls everything, they use laws to fix prices; but if the market is free, the price changes based on how much people want to buy and how much is available to sell.