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Price-quality effect – buyers are less sensitive to price the more that higher prices signal higher quality. Products for which this effect is particularly relevant include: image products, exclusive products, and products with minimal cues for quality. Expenditure effect – buyers are more price-sensitive when the expense accounts for a ...
Price-quality effect: Buyers are less sensitive to price the more that higher prices signal higher quality. Products for which this effect is particularly relevant include: image products, exclusive products, and products with minimal cues for quality. Expenditure effect: Buyers are more price sensitive when the expense accounts for a large ...
Psychological pricing (also price ending or charm pricing) is a pricing and marketing strategy based on the theory that certain prices have a psychological impact. In this pricing method, retail prices are often expressed as just-below numbers: numbers that are just a little less than a round number, e.g. $19.99 or £2.98. [1]
Contents. Price war. A price war is a form of market competition in which companies within an industry engage in aggressive pricing strategies, “characterized by the repeated cutting of prices below those of competitors”. [ 1 ] This leads to a vicious cycle, where each competitor attempts to match or undercut the price of the other. [ 2 ]
Gender-based price discrimination is the practice of offering identical or similar services and products to men and women at different prices when the cost of producing the products and services is the same. [ 52 ] In the United States, gender-based price discrimination has been a source of debate. [ 53 ]
When the price elasticity of demand is unit (or unitary) elastic (E d = −1), the percentage change in quantity demanded is equal to that in price, so a change in price will not affect total revenue. When the price elasticity of demand is relatively elastic (−∞ < E d < −1), the percentage change in quantity demanded is greater than that ...
In microeconomics and consumer theory, a Giffen good is a product that people consume more of as the price rises and vice versa, violating the law of demand. For ordinary goods, as the price of the good rises, the substitution effect makes consumers purchase less of it, and more of substitute goods; the income effect can either reinforce or ...
Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of goods even during shortages, and to slow inflation, or, alternatively, to ensure a minimum income for ...