Pricing from the Standpoint of Economic Theory

It is fairly obvious that a high price for a product tends to discourage a large portion of the market. Likewise, a low price typically encourages a large portion of the market to buy more of the product. It follows then that a high price tends to limit the potential market for a product, while a low price tends to expand the market. The quantity of any commodity that is produced and exchanged, and the price at which it sells, are determined primarily by conditions in the particular market for a product/service, given minimum quality differentiation between competing brands. In a competitive market, the principal forces that determine the price charged and the quantity produced and sold are contained in the prevailing conditions of supply and demand. The less competitive the market, the less the interaction of supply and demand.