ANTHROP 1AA3 Study Guide - Quiz Guide: Takers, Psychological Pricing, Conspicuous Consumption
6 Dec 2015
School
Department
Course
Professor
Document Summary
Monopolist: high degree of market power, therefore power to se their own prices. Price takers: they take the price given by others in the market. Cost based pricing: using cost of production to determine price. Cost plus pricing: involves addind percentage or predetermined amount of profit to the average cost of production. Marginal cost pricing: refers to the additional costs of producing (set different prices for different products) Full cost pricing: requires a business to allocate fixed costs between all the products that are sold. Disadvantages: least accurate, can be misleading, unfairly distributed. Absorption cost pricing: allocating overheads by calculating which department has incurred what proportion of the indirect costs. Advantages: too simplistic for multi-product firms, more aware of total cost of products, fair method. Disadvantages: not all indirect costs can be divided, more complex, relative benefits of absorption. Refers to a firm"s pricing strategy based on prices charged by its rivals. Predatory pricing: temporarily reducing price to force rivals.
