Week 7 Flashcards
More Realistic and Complex Pricing
1
Q
What strategy is used to price subsititues and complements
A
Marginal analysis
2
Q
Price discrimination
A
practice of charging different prices that are not cost-justified to different groups, e.g. due to age, gender
3
Q
Why price discriminate?
A
- Maximizing Profit
2.Different Willingness to Pay: - Segmenting the Market
4
Q
Price discrimination equation?
A
P1−MC 1 / P1 not equal to P2 - MC2 / P2
5
Q
Mark-up definition and equation
A
the markup is how much more a product is sold for compared to its cost of production. The markup helps businesses ensure that they are covering their costs and making a profit.
Formula for Markup:
Markup=P−MC
