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Fundamentals of Managerial Economics - Assignment Example

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The paper "Fundamentals of Managerial Economics" discusses that Limit Pricing is an exploitive pricing strategy imposed by a firm to make a market unprofitable for other interested players, as the prices set for the products are lower than the production cost…
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Fundamentals of Managerial Economics
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Extract of sample "Fundamentals of Managerial Economics"

Creaming or Skimming Price Policy: Product innovators who price the goods to exploit different demographic groups depending on their income embrace the strategy (Hirschey 566).
Loss-Leader Pricing Strategy: The strategy occurs whenever a firm imposes reduced prices on the goods of necessity to attract consumers who will in turn purchase the other types of goods without the knowledge that they are expensive (Hirschey 566).

Premium Pricing: It is a pricing strategy imposed by firms, and it is usually exaggerated to attract consumers who perceive that the prices set coincide with the products’ quality (567).
Contribution Margin-Based Pricing is a strategy, which enables firms to maximize the market’s profits by measuring the number of units that they can sell at a certain price. The profit determination emanates from the measure between the invested costs of production against the price (567).

Psychological Pricing: This is a strategic pricing approach, which lures customers to perceive that they will spend less on a product, for example, a product priced at $4.9 will attract consumers to make purchases with the perception that they will not be paying $5 (Hirschey 569).
Pricing of Complement Goods: Prevails in the act of reducing or increasing a product’s price to increase or reduce the demand for another product used as a complement.
Pricing in Public Utilities: Arguably, it is a strategy, which emphasizes using subsidies in the reduction of the costs of producing and availing goods of necessity and important services to the consumers (Hirschey 570). Read More
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