PRINCIPLE OF ECONOMICS

Principle of Economics

Principle of Economics

1. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy.

My pricing strategy would be a program called "Home Town Savings". This program I would utilize to boost my sales by using the benefit of repeat local customers. I would give a discount card to local residents who deliver their ID showing their address. This card would provide them a 10% discount on their whole sale. The card would also have a position for a store stamp, after getting 30 stamps they would collect a free sub. By using this strategy of having a different price for locals, I would obtain more local customers to re-join us more frequently. My out of town customers would be charged the normal menu price. This would give me a single-pricing strategy that could boost my sales without over charging up any of my customers. This endorsement also works good in that customers from out of town would not think that they were discriminated against in that it is only helpful if you live nearby.

2. If the government does this law maximum price chart and explains the effects of supply and demand analysis. Explain what would be the effects of this action.

If a maximum price that is less than the equilibrium price is set by the government, the result is a permanent excess of demand for goods. A different type of programming for customers that are cheaper for, the company seems to be a good route to take; however, customers may wonder if the quality is just as good as the type of programming they have been used to in the past. It could make customers upset if they knew the company had a small cost for providing their programming but were charging a high cost to their customer to receive the programming thus causing a big problem. This type of set up is good for the company but unfair to the customers. When a price ceiling levied by a government is high than the market equilibrium priced, the price ceiling has no effect on the economy (Brunner, 2007). It does not control supply nor support demand. It means that you cannot charge (or be charged) extra amount that is higher than before being charged.

3. Consider a perfectly competitive market.

A perfect competitive market is full of buyers and sellers, so nothing can affect the market price. If the demand of the product falls it is OK because the firm does not pick the price, the firm just chooses how much to make at the given market price. The firm does not lose anything. If the demand, for the product increases then the firm benefits of course and the price is not changed. There is no need to cut the price to sell more because the firm picks the amount they are willing to sell; if the price increased buyers will fall off (Brunner, ...