Why Do Retailers Use Loss Leader Pricing

question 121

Multiple Choice

Why do retailers use loss leader pricing?

• A)to attract customers to a store so they can be persuaded to buy a more expensive product instead
• B)to attract customers to the store so they will buy other products in addition to the leader product
• C)to price products at odd-numbered amounts to stimulate demand
• D)to maintain a status quo pricing strategy

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Definitions:

Monopsonist

is a market condition where there is only one buyer facing many sellers, giving the buyer significant influence over prices.

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.

Wage Rate

The amount of money paid to an employee per unit of time for labor or services rendered.

Monopolist

A monopolist is a single seller in a market who has significant control over the price and supply of a product or service.