An Introduction to the Determination of Price and Quantity of Production in an Islamic Market

The question of determining price and quantity of production in Islamic market is among the main issues about microeconomics from an Islamic viewpoint. Using an analytical method, this paper elaborates on the view that, Islamic market, compared with perfect competition, has a higher level of production and a lower price. The research findings show that, in Islamic market the pious producer, who abides by shariah, thinks of ’’earning a lawful and fair profit in order to secure his/her livelihood and perform his/her religious and social responsibilities’’. This attitude leads to decrease in the costs and increase in the productivity of production plants and thus, making supply line of the production plant take right direction. High productivity and fairly low cost together with the other differences between Islamic market and perfect competition market, make Islamic market, under ideal conditions, have a higher level of production, lower prices, greater stability, higher efficiency and greater welfare.