Pricing

MANAGERIAL ECONOMICS ASSIGNMENT Urjit Jhaveri; Roll No. 54 School of vegetable oil Management, Gandhinagar determine OF GOODS & SERVICES PRICING Pricing is one of the most authorized decisions a manager needs to take with regard to the achiever of a mansion. Not only in the near-term, but the effect of price choices passel besides have an impact on future profits. There are various methods and practices employed in arriving at the decision of how a product should be determined, when and wherefore should the price or pricing method be changed. The eventual(prenominal) pricing decision cannot be based solely upon schoolman theory and involves a fair degree of intelligence and experience. PRICING OF MULTIPLE PRODUCTS * Products with Interdependent Demand It becomes imperative for a manager to see to it the inter-relationships between products when they are produced by the same degenerate. These could either be substitutes or complements and their demands are interdependent. As is well known, with a price increase for one good, the demand for the separate increases in object lesson of substitutes. While for complements, a price increase reduces the demand for the other good. Here, the objective is to determine prices that maximize total profit for the firm rather than that earned by private products.

Hence, the effect of individual price on the demand for other products produced by the firm need to be taken into consideration. For a firm producing twain products, A and B, the optimal production mix and its pricing can be arrived at by using the marginal revenues: MRA = dTRA/dQA + dTRB/DQA MRB = dTRB/dQB + dTRA/DQB keep an eye on that dTRB/DQA and dTRA/DQB will both be positive for complements and negative for substitutes. oversized retail companies, especially in the FMCG sector, face the challenge of pricing multiple products quite often. Number of substitutes available from other suppliers also affect the pricing decision. * Joint Products Joint products are production... If you lack to get a full essay, order it on our website: Orderessay

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