The Practice of Using Dynamic Pricing Was Started in the 1980’s

question 54

Multiple Choice

The practice of using dynamic pricing was started in the 1980’s by American Airlines as an effort to compete with a now out-of-business discounter airline, People’s Express. Dynamic pricing then moved to other industries, including hotels and car rental companies, but only became popular when e-commerce arrived.
You are a consultant to a number of different organizations that use dynamic pricing, including American Airlines, St. Louis Cardinals, Coca Cola, and Marriott International. You are advising your clients of the use of dynamic pricing. Here are some questions that they have raised:
-What is dynamic pricing?

• A)A pricing approach that uses analytics software to improve demand forecasting
• B)A pricing approach in which the price of an item changes based on the demographics of individual customers
• C)A pricing approach that adjusts prices based solely on fluctuations in competitor's prices
• D)A pricing approach where the price of an item changes frequently based on complex algorithms

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Definitions:

Capital Goods

Durable goods that are used in the production of other goods or services, such as machinery and equipment.

Consumer Goods

Products that are purchased for consumption by the average consumer, as opposed to goods used in the production of other products.

Production Alternative D

A hypothetical option in a decision-making process for producing goods or services, often characterized by differences in technology, labor, or resources.

Production Alternative C

A specific choice or option in the array of possible production strategies or methods, typically designated in a scenario or case study.