Answer to Question #245858 in Economics for Roney

Question

What would your pricing strategy tend to be if you have determined that the price elasticity of the demand is:
a .greater than one
b .egual to one
c . Smaller than one

Answer 1

Depending on the degree of price flexibility, the strategy of uniform prices and the strategy of flexible, elastic prices are distinguished.

Single price strategy. With this strategy, a price is established that is the same for all consumers to strengthen their confidence in the enterprise and its product. This strategy is easy to use and offers great opportunities for catalog and mail order trading. The strategy of uniform prices is applied in practice infrequently, limited by time, geography, and commodity boundaries.

Flexible, elastic pricing strategy. This strategy is based on the change in the level of sale prices depending on the ability of the buyer to bargain. Flexible pricing is typically used when making deals for individual and custom-made products.