Multiple Choice
Which of the following exemplifies the substitution effect?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
All of the following are demand-oriented approaches to selecting an approximate price level except which one?
A
Perceived value pricing
B
Value-based pricing
C
Demand differential pricing
D
Cost-plus pricing
Verified step by step guidance1
Step 1: Understand the difference between demand-oriented and cost-oriented pricing approaches. Demand-oriented pricing focuses on consumer demand, perceived value, and willingness to pay, while cost-oriented pricing focuses on covering costs plus a markup.
Step 2: Review the given options: Perceived value pricing, Value-based pricing, Demand differential pricing, and Cost-plus pricing.
Step 3: Identify that Perceived value pricing sets prices based on the customer's perceived value of the product, which is demand-oriented.
Step 4: Recognize that Value-based pricing also relies on the value perceived by customers and their demand, making it demand-oriented.
Step 5: Note that Demand differential pricing adjusts prices based on different demand levels or segments, which is also demand-oriented, whereas Cost-plus pricing sets prices based on production costs plus a markup, making it a cost-oriented approach and not demand-oriented.
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