Continuation
ii. Theory of Price
The price theory in the microeconomic analysis is implicit in
the writings of Ibn Taimiyyah.
In his detailed discussion on price control, Ibn Taimiyyah
has analyzed how prices are determined in the market by the interplay of:
ü demand
ü and supply forces.
According to him, prices could increase:
ü due to the shortage
of supply of the commodity in question
ü and also because of
higher income of the people.
The former gives the concept of the leftward shift in supply
curve with a resulting increase in prices.
From the other side, an upward shift in the demand curve due
to rise in income (or the income effect) is reflected in the latter.
The ideas of movement along and shift in demand and supply
curves are thus implicit in that analysis.
Used from paper of Abdul Ghafar
Ismail and Noraziah Che Arshad
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