chapter 55 Flashcards
factors affecting price
- objectives for the business
-consumers
-lvel of demand - level of competition
- stage in the PLC
market forces
this consists of demand and supply and the point they meet is called the equilibrium .
what does elasticity measure
the response of demand to a change in price or income
price elasticity demand equation
percentage change in demand/percentage change in price
what does income elasticity of demand measure
the response of demand to a change in income
percentage change in demand/percentage change in income
how to measure cross elasticity of demand
percentage change in dmenad for a/percentage change in price of b
what is skimming
the process where a business sets a high price for it’s goods to gain a profit quickly.
what is penetration pricing
this is a strategy to help establish a new product and gain a share of the market, this is done by setting a low price initially.
what is premium prcing
a high price is set in the hope to set a image and indicate a high quality.
what is physchological pricing
setting a price that sounds less than it is
what is marginal pricing
where fixed costs or overheads are ignored and the business only considers the variable costs.
