Chapter 19, Problem 1LO

Summary Introduction

To Discuss: The significance of pricing decisions to an individual firm and economy.

Introduction: Pricing decisions are the decisions that an organizations make when fixing costs for their items or services. Pricing is viewed as a component of an organization's marketing strategy since it impacts its association with various customers in the market.

Explanation of Solution

The significance of pricing decisions to an individual firm and economy are as follows:

Price implies one thing to the buyer and another thing to the merchant. To the buyer, it is the cost of any product or service or something. To the merchant, cost is income, is the essential cause of revenues. Price is what is provided in a trade to get a good or service.

Purchasers are keen on getting a "sensible price." "Sensible price" truly signifies "perceived sensible value" during any transaction. Revenue is the value charged to customers which is multiplied by the quantity of units sold. Managers as a rule endeavour to charge a price that will procure a reasonable profit to the business.