Question

Talk about the pros and cons to different pricing strategies (for example complex, hard to implement, amount of producer surplus generated).

Answer 1

1. Premium pricing - It is advantageous because gives higher producer surplus and disadvantageous because it gives lpwer affordability to consumers and causes lower consumer surplus.
2. Predatory pricing - Advantageous for beating out competition and taking numero uno advantage. However disadvantages like lower profits margins amd price war is seen.
3. Bundle pricing- Advantageous for selling non saleable items too and thus offers better value buying. Disadvantages as overall pricing increases for customers.
4. Psychology pricing- Advantageous to attract customers based on 99,555, 111, 999 prices. Disadvantageous for producers as overall prices have to be reduced.
5. Penetration pricing- Advantages like consumer surpluses and high availability is seen. Disadvantages like high cost of marketing for producers is seen.

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