--%>

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 : Indication of Lorenz Curves The Lorenz

    The Lorenz curve gives an indication of: (w) the poverty rate. (x) dead end poverty. (y) relative poverty. (z) post-transfer poverty. Hello guys I want your advice. Please recommend some views for above Eco

  • Q : Characteristics of Labor-Leisure

    Can someone help me in finding out the right answer from the given options. When the wage rate paid for the labor rises, then: (i) Supply of labor raises (ii) Opportunity cost of the leisure increases. (iii) Workers always supply additional labor. (iv) Level of the na

  • Q : Price elasticities of demand and higher

    Price elasticities of demand tend to as: (i) fall as higher prices are charged. (ii) rise as higher prices are charged. (iii) almost always be constant. (iv) not be associated to the length of time. (v) not be influenced by price changes.

  • Q : Illustration of Contestable Market The

    The probably of the following industries to be a contestable market is: (i) electricity generation. (ii) cellular telephone services. (iii) cable TV systems. (iv) natural gas service. (v) water and sewer services.

  • Q : Constant cost industry in competitive

    When brick-making is a constant cost industry, during the long run this firm is probable to experience: (i) a severe shrinking of economic profit to zero. (ii) a decline in the price of bricks to approximately eight cents apiece. (iii) increased compe

  • Q : Price elasticity of demand on mid point

    When 900 tons of gourmet coffee beans are sold per month at $5.40 per pound but sales drop to 500 tons while its price rises to $7.20 per pound, the price elasticity of demand for that coffee based upon the mid-point or say arc formula is: (i) 2.0. (i

  • Q : Marginal revenue when market price

    When the market price of a good is $50 and a purely competitive firm raises its output from 20 units, marginal revenue of it is: (w) $50. (x) $1000. (y) $2.50. (z) $0.40. I need a good answer on th

  • Q : Labor History-Blacklisting I have a

    I have a problem in economics on Labor History-Blacklisting. Please help me in the following question. Firms which colluded by circulating the names of the union organizers and hence they would have complexity getting jobs were engaged is now-illegal

  • Q : Determine elasticity of demand for

    When the U.S. price elasticity of demand for gasoline is 1.0, the price elasticity of demand for gas sold through one of several gas stations along a busy highway: (w) less than 1.0. (x) 1.0. (y) greater than 1.0. (z) zero.

    Q : Complementary of cross-price elasticity

    The most complementary of the given pairs of goods are: (1) organic vegetables and French fries. (2) polyester fabrics and cotton cloth. (3) transistor radios and televisions. (4) jogging shoes and bicycles. (5) pencils and erasers.

    Discover Q & A

    Leading Solution Library
    Avail More Than 1421067 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1949137
    Asked

    3,689

    Active Tutors

    1421067

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.