Price Elasticity of Demand/Price Fixing
Exists when the value of the price elasticity of demand formula is less than 1.
What is elastic demand?
Establishes product prices as a function of product costs.
What is cost-based pricing?
Pricing that establishes retail prices that are high, relative to competing brands.
What is prestige pricing?
Percentages or dollar amount added to the cost of sales to arrive at the product's selling price.
What are markups?
Exists when the value of the price elasticity of the demand formula is greater than 1.
What is inelastic demand?
Pricing that attempts to set prices based on consumer responses to product prices.
What is demand-based pricing?
Pricing sets prices just below even dollar values ($99.99).
What is odd-even pricing?
Retail price reductions.
What are markdowns?
Exists when the value of the price elasticity of the demand formula is 1.
What is unitary elasticity?
Pricing that sets prices according to those charged by the firms closest competitors.
What is competition-based pricing?
Pricing that simplifies consumers' evaluation of alternative products by establishing a limited number of price points for groups or lines of product.
What is price lining?
What are quantity discounts?
An act that prevents businesses from restraining trade and interstate commerce.
What is the Sherman Act?
Price policy offers the same price to all buyers for purchases of essentially the same quantities in comparable situations.
What is the one-price policy?
Pricing that occurs when a firm sells select products below their usual price as a means of gaining attention or building store traffic.
What is leader pricing?
Discounts that are given to encourage buyers to provide payment promptly (cash).
What are cash discounts?
An act that prohibits any form of price discrimination that has the effect of reducing competition among wholesalers or retailers.
What is the Robinson-Patman Act?
Pricing policies reflect different levels of transportation and other costs related to the physical distance between buyers and sellers.
What is geographic pricing?
Prices of goods that when faced with rising costs, maintain the same price by reducing the size of the package or ingredients.
What is customary prices?
Discounts that are used to encourage buyers to make their purchases off-season.
What are seasonal discounts?