Pricing strategies.
A. In what situation should a firm offer "price matching guarantee"? Will such "price matching guarantee" increase or reduce profits? Explain.
B. Classical supply-and-demand analysis suggests that when the demand for a product increases, prices tend to go up. Still, we are now in the holiday season and everyone is shopping for gifts so there is more demand but many stores offer big discounts instead of raising their prices. Use the knowledge from the class to explain why holiday sale pricing is a common practice for retailers.