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13 Cards in this Set
- Front
- Back
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Elastic Demand |
Exists when the value of the price elasticity is less than -1. -price increase=decrease in demand=decrease in total revenue -price decrease-increase in demand=increase total revenue |
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inelastic Demand |
when the value of the price elasticity of demand is greater than -1 -increase in price=decrease demand=increase in total revenue -price decrease =increase in demand =decrease in total revenue |
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Inelastic |
IF demand does not decrease at all in response to price increase |
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unitary elasticity |
exists when the value of price elasticity is -1 -change to demand is directly proportional to change in price. -total revenue does not change in response to price increase or decrease |
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SHERMAN ACT (1890) |
prevents agreement amongst corporations that would restrain trade or create monopoly |
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ROBINSON-PATMAN ACT (1936) |
prohibits any form of price discrimination that has the effect of reducing competition among wholesalers or retailers. -can't sell same product at different prices to different buyers. |
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PRICE SKIMMING |
strategy that introduces new products at higher prices.
-higher price enhances perception that quality is high |
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PENETRATION PRICING |
pricing strategy for new product - -set price low to get more people to buy it |
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Cost-based-pricing |
involves calculating the cost of the product, and then adding a percentage mark-up to determine price. |
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Demand -based pricing |
attempts to set prices based consumer responses to product prices |
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competition based pricing |
sets prices to firms closest competitor |
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Prestige pricing |
establishes retail prices that are high, relative to competing brands. - the higher price is intended to suggest higher quality |
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odd-even pricing |
sets price just below even dollar value ($99.99) |
