Which two basic approaches are commonly used to set prices in microeconomics?

• A. Price discrimination and price leadership
• B. Marginal utility pricing and average cost pricing
• C. Cost-based pricing and value-based pricing
• D. Perfect competition pricing and monopoly pricing

Answer: (C)

Verified step by step guidance

1. Understand that the question asks about the two basic approaches commonly used to set prices in microeconomics, focusing on general pricing strategies rather than market structures or specific pricing tactics.
2. Recognize that cost-based pricing involves setting prices primarily based on the costs of production plus a markup, ensuring that all costs are covered and a profit margin is included.
3. Understand that value-based pricing sets prices based on the perceived value to the customer rather than just the cost, reflecting what consumers are willing to pay for the product or service.
4. Note that other options like price discrimination, price leadership, marginal utility pricing, average cost pricing, perfect competition pricing, and monopoly pricing refer to specific market conditions or pricing tactics rather than fundamental pricing approaches.
5. Conclude that the two basic approaches commonly used to set prices are cost-based pricing and value-based pricing, as they represent the foundational methods for determining price levels in microeconomics.