Distinguish Between Value-Based Pricing and Cost-Based Pricing

question 113

Essay

Distinguish between value-based pricing and cost-based pricing.

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Definitions:

Actual Output

The total value of goods and services produced by an economy at a given period, also known as real GDP.

Aggregate Supply

The total supply of goods and services produced within an economy at a given overall price level and in a given time period.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used as a measure of inflation.

Expected Price Level

The anticipated average level of prices in the economy for goods and services, as predicted by consumers and businesses.