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Discrimination Price.
Of The market price for a product product is like a signpost for companies'. It shows them more or less what people are prepared to pay. Nevertheless, companies can set their prices just above or just below the market price if they want. They can even choose to ignore the market price completely. In the real world of business, setting prices involves skill, guesswork and tisk - taking. Companies have lots of pricing tricks which help to increase profits. For These tricks of the One is price discrimination.
Price disecrimination Means Different charging a price for the Same Different product product to the customers. For example, you walk into a shop and buy a CD for 15. A few minutes later, I walk into the same shop and buy another copy of exactly the same CD. This time, the shopkeeper charges me 20! Price discrimination is That.
There are Different types, or degrees, of price discrimination. First degree price discrimination is when almost every consumer pays a different price for the same product. How can this happen? Remember that the demand curve slopes downward. In theory, every consumer has their own point on the curve. In other words, each person values the product differently. You may think that an Elton John CD is worth 20, whereas I think is it only worth 50 cents! We are on different points on the demand curve. First degree disecrimination With, each will of the consumer a pay what he or she Thinks the product product is worth the, sellers and charge each person accordingly.
This all sounds great, But IT is not praactical Usually in the real market PLACE. Nevertheless, it is sometimes possible. An auction, for example, works in this way. In an auction, each consumer makes a bid for the product, and the highest bid wins. In this way, the product is sold at a price that the buyer thinks is right. Becoming more is auctioning and more common all on the Web World Wide, and auctioning websires have Become very big business.
Of Second degree price discrimination is more common all than first degree diserimination. It involves changing price according to how much of the product is sond. For example, if a customer buys three pencils, they pay one euro per pencil. If they buy 300 pencils, they pay only 75 cents per pencil. This is a kind of reward for reward for buying large amounts. This kind of diserimination is important for retailers . It allows shopkeepers to buy goods in bulk from wholesalers at lower prices. The then the add a Shopkeepers markup for They price the when the sell the Goods on the Ordinary to the customers.
For What about THIRD, degree price discrimination? This is when certain types of customer are charged different prices. For example, pensioners and students often get discounts on public transport or for arts events. These people can not afford the normal market price. By offering discounts, companies widen their market share but still make a profit.
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