MGT252H5 Lecture Notes - Lecture 9: Price Discrimination, Variable Cost, Price Skimming
Document Summary
Price amount of money charged for a product or service or the sum of the values that consumers exchange for beneits of having or using the product or service. Firms harvest the value that they create for customers using prices. Customer value based pricing (good value pricing, value added pricing) Cost based pricing (cost plus pricing, break even pricing) It may not be maximizing proit in the current period, but it may be maximizing value of future proit stream. To maximize proit, a irm must consider the following: Fixed costs doesn"t vary with quantity in short run (i. e. capital) Variable costs varies with quantity in short run. Marginal costs change in total cost for a one unit change in quantity. Total costs sum of ixed and variable costs. Monopoly pricing is illustrative of demand and cost structure. Monopolist trades of price and quantity sold.
