Explain Pricing Under Different Market Conditions

The products for which there is a direct relation with the price and consumer value their money by charging low prices by modifying the price for the same product. In the context of oligopoly the Kinked demand hypothesis is designed to explain a Price and output determination b Price rigidity c Price leadership d Collusion among rivals.

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Market Based Pricing is defined as a process of setting prices of goodsservices based on the current market conditions.

. Market Structures and their Different Pricing Strategies. Iv Revenue Curves under Oligopoly. The act of selling the same article produced under single control at different prices to different buyers is.

Any change in the demand and supply conditions will change the market price of the product and consequently the horizontal AR curve of the firm. Since the number of consumers is large even under monopoly the monopoly is similar to the pure competitive market so far as the demand side as a whole ie. Excessive inflation can cause hording as producers have incentive to delay sales as the prices of goods rise.

Market Price of a Perishable Commodity Egfruits and vegetables the supply is limited and cannot be stored for. A uniform b different c less d zero 33. Changes in costs and demand also lead to price stability under normal conditions so long as the MC curve intersects the MR curve in its discontinuous portion.

Oligopolistic Competition Market Pricing Strategy. The average revenue curve is the downward sloping industry demand curve and its corresponding marginal revenue curve lies below it. Pricing under monopoly like that under perfect competition is determined by demand and supply conditions in the market.

Pricing under Different Market Structures. Also since there are many competitors a firm wont be affected by another firms strategy. The rate of change in general price levels.

For a firm to employ this pricing strategy there are certain conditions that must be met. Therefore the monopolist can set a high price for those buyers whose price-elasticity of demand for the product is less than 1. It is for the price elastic demand products.

A critical analysis of the products features is done and then depending on whether the product has more or less features than the competitors product the. The firm must be a price maker Price Leader A price leader is a company that exercises control in determining the price of goods and services in a market. Each firm will set price and output of its own product.

Here prices are determined by competitors. This paper is going to look further into each of these market structures and define. If a seller raises the price of his product others will not follow him.

However for all these to take place certain conditions must be met. When it comes to the business world there are four main market structures that are typically utilized. Consequently there exist many prices in the market due to differentiated products.

The price reduction or extension by one firm affects the other firms. The point of. The price leaders actions ie operate in a market with imperfect competition.

In the words of Joan Robinson. Both deflation and excessive inflation can cause a breakdown in normal economic activity that makes business and. Industry demand is concerned.

In market based pricing a company does the analysis of various prices of similar products. The price-elasticity of the product must be different in different markets. 2 Under Monopoly or Imperfect Competition.

FEATURES OF PERFECT COMPETITON MARKET A Large Number of Buyers and Sellers Price Taker market price Homogeneous Products same product The firms are Free to Entry or Exit No Individual Preferences buyerseller Each buyer and seller operates under the conditions of certainty Mobility of Factors of Production move freely from industry to. Market-Oriented Pricing Method-Under this category the is determined on the base of market research Perceived-Value Pricing- In this method the producer establish the cost taking into consideration the customers approach towards the goods and services including other elements such as product quality advertisement promotion distribution. It explains how prices are determined under perfect competition.

Price discrimination means charging different prices from different customers or for different units of the same product. There must be a degree. Price discrimination will be profitable only if the elasticity of demand in different sub markets.

They know that by following the same price they can earn more profits. Price-fixation is an important managerial function in all business enterprises. Are determined by the forces of demand and supply.

Under perfect competition the sellers sell the same products and there are free entry and exit of firms in the market. MC MR MC curve must cut MR curve from below. Refers to a price discrimination in which the monopolist divides the entire market into submarkets and different prices are charged in each submarket Therefore third- degree price discrimination is also termed as market segmentation.

If the price set is quite high the seller may not find enough number of consumers to buy his product. If the price fixed is too low the seller may not be able to cover his cost. If there was perfect competition then price discrimination would be not possible.

The whole analysis of the kinked demand curve points out that price rigidity in oligopolistic markets is likely to prevail if there is a price reduction move on the part of all sellers. Under oligopoly market situation the number of sellers is small. These market structures are perfect competition monopolistic competition oligopoly and monopoly.

Pricing decisions under different market structures 1. Since under monopolistic competition different firms produce different varieties of products therefore different prices for them will be determined in the market depending upon their respective demand and cost conditions. Many different forms of price discrimination can take place such as 1st degree 2nd degree third degree and the hurdle model of price discrimination.

First the market must be a form of imperfect competition. In this type of price discrimination the monopolist is required to segment market in a manner so that. Price-Output Determination Given the conditions of perfect competition the market price is determined by the market forces Market demand and Market Supply The firm in a perfectly competitive market is a Price-taker not a Price-Maker Price Determination Rule.

It is adopted by the marketers for products about which consumers are price conscious and can control the market on basis of price. Perfect Competition pricing decisions. Thus fixing appropriate price is a major decision-taking function.

Notably there is a difference between the demand curve of an individual firm to that of the market. As a result companies will have control over their own prices. In simple words even if the seller increases the price such buyers do not reduce the purchase volume.

Price Determination under Monopolistic Competition. Deflation gives buyers incentive to delay purchases as things are always getting cheaper.

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