This simple theory of determining prices is one of the core principles underlying economic theory.https://wiromriasucke.ml/business-management-software-free-mac.php
In each instance, the available supply is finite in nature. There are only a certain number of automobiles available and only a certain number of appointments available at any given time. At any time, there is also only a finite number of potential consumers available. Demand may fluctuate depending on a variety of factors such as whether an improved version of a product is available or if a service is no longer needed. Demand can also be impacted by an item's perceived value, or affordability, by the consumer market. Equilibrium occurs when the price points are such that the number of items available, the supply, is consumed by potential customers.
Firms often differentiate their product lines vertically versus horizontally considering consumers' differential willingness to pay for quality. Jain of INSEAD, many firms offer products that do not vary in quality but with characteristics such as color or flavor.
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Apple, for example, offers different iPhone models with varying prices and capabilities but each model comes in a variety of colors that are the same price. The study found that using uniform prices for all products in a product line is the best pricing policy. If Apple, for example, charged a higher price for a silver iPhone X versus a space gray iPhone X, demand for the silver model might fall, the supply of the silver model would increase, and Apple might be forced to reduce the price of that model.
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