Course : Z0117 – Ekonomi Manajerial

Effective Period : 2018

Pricing Practices
 STRUCTURE OF THIS TEXT:
This text should help you accomplish the following
objectives:
chapter 15. pricing practices shows how the force of supply
and demand interact in setting where market power is
prevalent. Importantly, this
 Sub titles
• Pricing Rules-of-Thumb
• Mark-Up Pricing and Profit Maximization
• Price Discrimination
• Two-Part Pricing Multiple-Product Pricing
• Joint Products: Joint Product Pricing Example
 PRICING RULES-OF-THUMB
• Competitive Market Pricing: Rule-of-Thumb In competitive
markets, set P =MR =MC for maximum profits.
• Imperfectly Competitive Pricing Ruleof-Thumb: When
P=f(Q), set P=MC/[] + (1 /ep)] for maximum profits.
 MARK-UP PRICING AND PROFIT
MAXIMIZATION
• Mark-Up on Cost : The difference between price and cost,
measured relative to cost, expressed as a percentage.
• Profit Margin : The difference between the price and cost
of a product.
 PRICE DISCRIMINATION
• Price Discrimination: A pricing practice that sets prices in
different markets that arc not related to differences in
costs.
Joint Production with Excess By-Product
(Dumping)
• The determination of a profit-maximizing activity level is
only slightly more complex if a downturn in demand for
either product A or B causes marginal revenue for one
product to be negative when all output produced is sold to
the marketplace.
THANK YOU