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Pricing and Price discrimination application
The purpose of this question is to apply concepts aboutpricing.
As we know, pricing is one of the most important decisions afirm can make given its market structure, the market demand, and costconditions that it is facing.
1. In your experience, which pricing strategy(cost-plus pricing, target return etc.) is the most common?
a. Give an example of a product or service anddiscuss how you think the price of this product/service is determined.
b. Why do you think the firm uses this pricingstrategy? Explain.
2. This week we also discussed pricediscrimination. Can you give an example of a product in which you observedprice discrimination? If yes, what typeis it? Explain.
A noncompetitive firm with the total cost function TC = 0.4Q3- 7.5Q2+ 85Q + 300 has the following demand function for its product P = 350 - 5Q - What is the firm's profit maximizing price and output combination?
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describe the current market equilibrium for the industry.
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