What Pricing Options Does a Firm Have When the Difference

question 86

Essay

What pricing options does a firm have when the difference between V, the consumer's willingness to pay, and C, the cost to produce the good or service, is large?

---

Definitions:

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the costs of goods sold, essentially measuring how much out of every dollar of sales a company actually keeps in earnings.

Invested Assets

Resources or capital put into financial instruments, land, buildings, or other assets with the expectation of generating income or profit.

Operating Income

Income generated from a company's core business operations, excluding any profits or losses from investments and interest or taxes.

Transfer Price

The price charged for goods or services transferred between departments or divisions within the same company or between affiliated entities.