Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 25.2, Problem 1ST
To determine
Explain one criticism of average cost pricing.
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What is the logic behind “cost plus mark up” pricing scheme? Please explain the greatest weakness of this pricing scheme?
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3. Fixed cost
4. Total cost
Chapter 25 Solutions
Economics (MindTap Course List)
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- FITnest is one of the few fitness centers serving the greater area. The gym has been open for 3 years. It charges a flat price of $25 per visit to its clients, and the firm’s current average cost of production is $10 per visit. (You may assume that average cost has the “traditional U-shape”.) a) The owners of the gym heard you are studying economics, and they want some advice on how they could possibly increase their profits through price discrimination, which is a concept they have heard of but do not know much about. Provide an explanation of what price discrimination is and give them an example of how they could use group pricing in their climbing gym business. Explain how group pricing works to increase their profit. b) Given the current situation in the market for fitness in the area, would you expect to see competitors enter or exit the market? Explain. c) Given the current market conditions, what would you predict to observe in the long run with respect to the demand for…arrow_forwardYour company manufactures travel bags and is keen on establishing its presence in the Indian market. If you were given the responsibility to decide the pricing strategy the company should use, what would you decide? Explain your answer.arrow_forwardThe new book, The secrets of the world of Fungi was published as a hardback edition for £20 in March and the paperback edition was published in November for £9.90. What type of pricing is this?arrow_forward
- Define and give a few examples: Pricing Tactics Price Discriminations Pricing Sturcturearrow_forwardEveryday-low pricing is a pricing strategy that is consistent with a goal of achieving long-term profitability through volume. ( ) a) True () b) Falsearrow_forwardCould companies implementing two pricing strategies at the same time? For instance, cost based pricing and competition based pricingarrow_forward
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