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When demand is slack and market is competitive, firms follow which of the following pricing methods?

When demand is slack and market is competitive, firms follow which of the following pricing methods? Correct Answer Marginal cost pricing

The correct answer is Marginal cost pricing

Key PointsMarginal Cost Pricing:

  • Marginal-cost pricing is the practise of adjusting a product's price to equal the additional cost of producing an extra unit of production.
  • According to this strategy, a manufacturer only charges the addition to total cost arising from materials and direct labour for each product unit sold.
  • During periods of low sales, businesses frequently set prices close to marginal cost.

Important Points

  •  Marginal Cost Price is a pricing strategy that requires businesses to determine prices for goods and services at a rate higher than the marginal cost of production, or MCP.
  • This is a relatively simple statistic that can be used to represent the cost of producing an additional unit of a given output of any type of setting using this special pricing tool.
  • It is common for the approach to play a role in setting prices for utilities and other situations in which competition for consumers follows the pricing method.

Related Questions

Match List I with List II: List I (Pricing Strategies) List II (Description) (A) Ramsay pricing (I) Setting a high price when a product is first introduced and gradually lowering price as it gains scale (B) Price skimming (II) Firm charges lower price (than the ongoing price) to gain market entry (C) Cost plus pricing (III) Price deviations from marginal cost should be inversely proportional to price elasticity of the product (D) Penetration pricing (IV) It is full cost pricing strategy that also includes mark up for target return, degree of competition, price elasticity and availability of substitutes. Choose the correct answer from the options given below:
Product line pricing strategy includes which combination of the following?
1. Public utility pricing
2. Complementary goods pricing
3. Spare parts pricing
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Select the correct answer:
Cost plus pricing is considered appropriate for which combination of the following? (i) Product Tailoring (ii) Public Utility Pricing (iii) Refusal Pricing (iv) Monopoly Pricing Choose the correct answer from the code given below:
Cost plus pricing is considered appropriate for which combination of the following?
i. Product Tailoring
ii. Public Utility pricing
iii. Refusal pricing
iv. Monopoly pricing
Choose the correct answer
In pricing one new emerging model is Outcome Based Pricing Model. When pricing is done for the IT industry., which of these will represent Outcome Based Pricing?
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(I) Product Tailoring
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(III) Refusal Pricing
(IV) Monopoly Pricing
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3. Selecting the final price
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