Answer to Question #57908 in Economics for jeena

Question

what exactly is observed price? and the reasons for it to go higher or lower. some examples for observed price too..

Answer 1

Observed price is the price, that is collected or reported for a sampled product or item. We may predict one price, for example, we can predict, that apples will cost $2 per kilogram next month, but measure (or observe) another, for example, $2.3 per kilogram. There may be many reasons, why the observed price is higher than the predicted, for example, the change in predicted weather, the development of production technology etc.