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1 mar 2017 · This paper offers a simple model of the price mechanism in markets where buyers take prices as given and prices are set by sellers, as in most consumer markets.
The task here is to appraise (i) the empirical evidence and (2) the theoretical significance of full-cost pricing and of other theories which at least appear to relate prices only to costs. Before this can. be undertaken, the meaning of the full-cost doctrine must be de-lineated.
There is a fundamental difference between selling costs and production costs. Production cost includes all the expenses incurred in making particular product and transporting it to the consumers. They include, outlays incurred on services engaged in the manufacturing of the product like land, labour and capital etc.
Rather than calculating prices to cover costs or achieve sales goals, students will learn to make strategic pricing decisions that proactively manage customer perceptions of value, motivate purchasing decisions, and shift demand curves.
Price theory is concerned with explaining economic activity in terms of the creation and transfer of value, which includes the trade of goods and services between difierent economic agents. A puzzling question addressed by price theory is, for example: why is water so cheap and diamonds
This paper reviews topics in price theory such as rational choice, Walrasian equilibria, complete and incomplete markets, externalities and nonmarket goods, strategic pricing with complete and incomplete information, and some behavioral anomalies.
When high-valuation consumers identify themselves at the higher price, the seller may extract more consumer surplus and increase his profit. In the paper, we address two common rationing-based price discrimination strategies, multiple-price menu and premium advance selling..
