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price
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The amount of money exchanged for a good or service, or the sum of all the values that customers exchange for the benefits of having or using the product or service
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value-based pricing
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uses the buyers' perceptions of value, not the sellers cost, as the key to pricing
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cost-based pricing
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sets prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk
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difference between value-based pricing and cost-based pricing ?
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Value-based pricing is customer driven vs cost-based pricing is product driven
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price elasticity
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a measure of the sensitivity of demand to changes in price
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inelastic demand
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when demand hardly changes with a small change in price
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Pricing in Different Types of Markets
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1. Pure competition
2. Monopolistic competition
3. Oligopolistic competition
4. Pure monopoly
2. Monopolistic competition
3. Oligopolistic competition
4. Pure monopoly
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Pure Competition Market
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uniform commodity
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monopolistic competition
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sellers can differentiate their offers to buyers
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oligopolistic competition
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market consists of only a few large sellers
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pure monopoly
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one seller
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demand curve
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shows the number of units the market will buy in a given period at different prices
Higher price=lower demand
Higher price=lower demand
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elastic demand
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when demand changes greatly with a small change in price
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