Answer to Question #117495 in Microeconomics for Siliana

Question

typically, retail prices for clothing and shoes of a particular brand and style are the same regardless of size. yet, larger sizes use more raw material in their production are thus more costly to produce. why do you think this occurs? are firms that these products at a single price regardless of size engaging in price discrimination?

Answer 1

Retailer product price and price discrimination

The retailer is like a monopoly in its market because of the broad demand for different products which they control. The price of the retailer main depends on the following factors: cost of labour, rate of inflation, currency exchange rate, and government policy that influence the market of a product. These factors have either a positive or negative influence on the outcome. The main challenge facing the retails is Keeping price competitive of their product in the market.

Most products sold under the same price are mainly low-ticket items with higher margin and rotation that are good enough to accommodate a fixed rate. The importance of selling low ticket item at the same price allows to make out that the product are cheaper, which can bad experience risk of having the product.

The retailer engages in price discrimination because they are monopolist in the market and has power over pricing control. The supply and demand of the Products depend on them. Thus, they can price-setting to earn maximum profit.