--%>
Assignment Help - homework help

Psychological Pricing

Define the term Psychological Pricing and what are their aspects?

E

Expert

Verified

Psychological Pricing:

This policy considers the psychology of prices and not only the economics. When the customers can judge the quality of a product by examining it, they make less use of price to judge the quality of product. They rely more on their judgments, past experience with the product and its superior/ attractive/ unique features.

When customers cannot judge quality because of lack of information or skill, price becomes an important quality signal.

Another aspect of this type of pricing is reference prices, which are prices that the buyers carry in their minds and refer to when they look at the product. Sellers can influence or use the reference prices when setting prices. Even small differences in prices can suggest product differences.

Many customers believe that prices should end in odd numbers. Many customers see that a pair of shoes are priced at $99 instead of $100 as a price in $90 range (two figure price) rather than $100 (three figure prices) and thus psychologically considers the product to be less expensive.

   Related Questions in Microeconomics

  • Q : Marginal cost Give the answer of

    Give the answer of following question. Refer to the given data. The marginal cost of producing the sixth unit of output is: A) $24. B) $12. C) $16. D) $8. 432_f</span></p> </div> <!-- /comment-box --> </li> </td> </tr><tr> <td> <li> <div class=

    Q : Problem related to budget line Refer to

    Refer to the budget line illustrated in the diagram given. If the consumer's money income is $20, the: 1) prices of C and D cannot be determined.2) price of C is $2 and the price of D is $4. 3) consumer can obtain a combination of 5 units of both C and D. 4)

    		•
  • Q : Justified investment by paying income

    When the price of each of the given assets is $10,000 and the interest rate is 10%, then investment is most justified for: (1) a perpetuity paying $900 annually. (2) a machine with a 3 year life which can be leased to an outsider for $10 per day. (3) an income stream

    		•
  • Q : Examples of pairs of complementary goods

    I have a problem in economics on Examples of pairs of complementary goods. Please help me in the following question. The illustrations of pairs of complementary goods would comprise: (1) Coffee and tea. (2) Butter and margarine. (3) Motor boats and wa

    		•
  • Q : Price ceiling If the government puts a

    If the government puts a rent ceiling of $650 a month, what is the rent paid and how many rooms are rented? Explain why?

    		•
  • Q : Problem on financial Intermediation The

    The main reason for the existence of financial intermediaries is as: (1) Direct flows of savings from the individuals to firms would necessitate higher transaction costs. (2) That just wealthy individuals can afford to invest in the stocks and bonds. (3) The habits of

    		•
  • Q : Breaks even point Hey friends I need

    Hey friends I need your help to solve out this problem regarding to a purely competitive firm breaks even while: (w) MR = MC (x) TR = TC (y) MC > MR (z) TR > TC. Can someone suggest me the ri

    		•
  • Q : Well-recognized market structure

    Well-recognized market structures do not comprise: (i) monopoly. (ii) monopolistic competition. (iii) oligopoly. (iv) oligarchy. (v) pure or perfect competition. I need a good answer on the topic of Economi

    		•
  • Q : Unexpected growth of inventories Can

    Can someone help me in finding out the right answer from the given options. Whenever the quantity of a good supplied surpasses the quantity demanded: (i) Unexpected growth of inventories will cause prices to drop. (ii) The present market price is beneath equilibrium.

    		•
  • Q : Chain of effects-Market Equilibrium

    Market for goods is in equilibrium. There is an increase in demand for this good. Describe the chain of effects of this change. Elucidate with the help of diagram.

    		•