FACTOID #31: Think Antarctica is inhospitable? Think again - its land area is only ninety-eight percent ice. Reassuringly, the other 2% is "barren rock".
Price points are prices for which demand is relatively high. In introductory microeconomics we are told that a demand curve is downward sloping to the right and either linear or gently convex to the origin. The first is usually true, but with regard to the second, in reality, price surveys indicate that demand for a product is not a linear function of its price and not even a smooth function. Demand curves look more like a series of waves than a straight line. price points (really really small) File history Legend: (cur) = this is the current file, (del) = delete this old version, (rev) = revert to this old version. ... In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ... This article does not cite its references or sources. ... The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ... A linear function is a mathematical function term of the form: f(x) = m x + c where c is a constant. ...
Points A, B, and C in the diagram are price points. By increasing the price beyond a price point (say to a price slightly above price point B), sales volume decreases by an amount more than proportional to the price increase. This decrease in quantity demanded more than offsets the additional revenue from the increased unit price. As a result, total revenue decreases when a firm raises its price beyond a price point. Technically, the price elasticity of demand is low (inelastic) at a price lower than the price point (steep section of the demand curve), and high (elastic) at a price higher than a price point (gently sloping part of the demand curve). It is a common marketing strategy for a firm to set prices at existing price points. In economics, the price elasticity of demand (PED) is an elasticity that measures the responsiveness of the quantity demanded of a good to its price. ... It has been suggested that Product marketing be merged into this article or section. ...
There are 3 main reasons for the existence of price points:
Substitution price points
price points occur at the price of a close substitute
when an item's price rises above the cost of a close substitute, the quantity demanded drops sharply
Customary price points
people are used to paying a certain amount for a type of product
increasing the price beyond this amount will cause sales to drop dramatically
The concept of price is central to microeconomics where it is one of the most important variables in resource allocation theory (also called price theory).
Price is also central to marketing where it is one of the four variables in the marketing mix that business people use to develop a marketing plan.
From this point of view, a price is similar to an opportunity cost, that is, what must be given up in exchange for the good or service that is being purchased.
Feeds |
Contact